Gaming Business Fall 2012

Canada's Premier Gaming Industry Magazine

Vol. 7 No. 3

Fall 2012

A New Age in Sports Wagering Sports Betting Innovations in North America and Beyond Inside: Helping Local Charities Win The Corporate Security Agenda Protecting Borders with Geolocation

PM 40063056

2012 Summit Highlights

June 17-19, 2013 Palais des congrès Montréal, Québec See pages 43-46

Fall 2012 Volume 7 Number 3 Publisher

Richard Swayze richards@mediaedge.ca 416.512.8186 ext. 246

Editor

Matthew Bradford matthewb@mediaedge.ca

Advertising Sales

Richard Swayze richards@mediaedge.ca

Senior Designer

Annette Carlucci

annettec@mediaedge.ca

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Jennifer Carter

jenc@mediaedge.ca

Production Manager

Rachel Selbie

rachels@mediaedge.ca

Circulation Manager Circulation Inquiries

Lina Trunina linat@mediaedge.ca

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contents 26

36

4

EDITOR'S NOTE

6

MESSAGE FROM THE CGA

8

COVER STORY

President Kevin Brown

President & CEO Bill Rutsey

kevinb@mediaedge.ca

wrutsey@canadiangaming.ca

Senior Vice President Chuck Nervick

Vice President, Public Affairs Paul Burns

chuckn@mediaedge.ca

pburns@canadiangaming.ca

Canadian Gaming Business is published four times a year as a joint venture between MediaEdge Communications and The Canadian Gaming Association To advertise: For information on CGB’s print or digital advertising opportunities: Richard Swayze 416-512-8186 ext. 246 richards@mediaedge.ca Copyright 2012 Canada Post Canadian Publications Mail Publications Mail Agreement No. 40063056 ISSN 1911-2378 Guest editorials or columns do not necessarily reflect the opinion of Canadian Gaming Business magazine's advisory board or staff. No part of this issue may be reproduced by any mechanical, photographic or electronic process without written permission by the publisher. Subscription rates: Canada $47.25 per year, $84.00 two years. All rates are payable in Canadian Funds only.

Postmaster send address changes to: Canadian Gaming Business Magazine 5255 Yonge Street Suite 1000, Toronto, Ontario M2N 6P4

Official Publication of the Canadian Gaming Summit

14

42

A New Age in Sports Wagering: Sports betting innovations in North America and Beyond

SPECIAL SUPPLEMENT:

Charitable Gaming Helping Local Charities Win: The revitalization of Ontario's Charitable Gaming Industry Executive Q&A: Blair Connolly

22

CORPORATE PROFILE

25

FINANCE

26

GAMING TECHNOLOGY: T he Corporate Security Agenda:

32

GAMING TRENDS

Protecting Boundaries with Geolocation Tech GeoSweep Profile

36

MARKETING

40

LEGAL

42

FACILITY PROFILE

44

2012 SUMMIT HIGHLIGHTS

SPECIAL INSERT: Canadian Gaming Lawyer Fall Edition

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nline Gaming: An Organization's O Necessity and Hacker's Paradise

The state of casino security and surveillance To Secure and Protect: The newest products in security and surveillance

Sex, Age, Money, and Marketing An Unprecedented Online Settlement Casino du Lac-Leamy's $50 million renovation

Canadian Gaming Business | 3

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You've heard the buzzwords before: iGaming, eGaming, social media, mobile platforms, and internet play. They're the topics dominating board rooms across North America as stakeholders from across the gaming industry strive to take their offerings online in an effort to win over today's techsavvy players.

In this issue we've assembled a comprehensive look at how gaming organizations are taking the online plunge. It begins with our cover story, “A New Age in Sports Wagering”, wherein we spotlight recent sports betting innovation from BCLC, Cantor Gaming, and Paddy Power. Then, in our Gaming Trends section, we turn our focus to geo-location technologies in Lindsay Kininmonth's piece, “Protecting Boundaries with Geolocation Tech”, and the Atlantic Lottery Corporation's “GeoSweep Profile”.

We're a l w ay s k e epi n g a n eye out for t he ne we st technologies, and in this issue we highlight the latest security and surveillance trends and products in, “The Corporate Security Agenda”, featuring an insightful intro

by Gerr y Boose, E xecutive Director of The Gaming Security Professionals of Canada.

Speaking of gaming evolutions, we've committed a special supplement to the successes in charitable gaming. It includes Peter McMahon's overview of the revitalization of Ontario's charitable gaming industry in, “Helping Local Charities Win”; and a Q&A with Blair Connolly, VP of British Group Sales and Marketing on the charitable gaming scene in the Atlantic Provinces.

Within these pages, you'll also find KPMG's report on iGaming security, “Online Gaming: An Organizations’ Necessity and Hackers’ Paradise”; Marshall Fenn's take on player audience behavior with “Sex, age, money, and marketing”; Heydary Hamilton's comment on the PokerStars settlement with “An Unprecedented Online Settlement”, and some great images from the 2012 Canadian Gaming Summit.

Lastly, this issue features the fall edition of IMGL's Canadian Gaming Lawyer. As always, Editor Michael Lipton and his colleagues offer an expert look at the laws, regulations, and trends affecting all aspects of the gaming industry in Canada and the US. It's a must-read for anyone looking to stay ahead in the ever-changing gaming landscape.

A dynamic industr y deser ves a big issue, and we're confident you'll find plenty to discuss and share within this edition. If you'd like to contribute an article, idea, or feedback for future editions, we welcome you to connect with us. In the meantime, we wish a successful show to the many CGB subscribers attending G2E! Matthew Bradford Editor, matthewb@mediaedge.ca

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Niagara Summit Success Story

By Bill Rutsey, President and CEO of the Canadian Gaming Association

As Chair of the Canadian Gaming Summit, I am proud to let you all know that this year’s Summit in Niagara Falls was the most content-rich and highly attended to date.

The brand new Scotiabank Convention Centre proved to be the ideal venue for the event. Our change in date from April to June helped ensure great weather for the Golf Classic at the Whirlpool Golf Course, and the ability to get around easily and enjoy our host community.

I’d like to congratulate and thank our co-host and lead sponsor, Ontario Lottery and Gaming – especially CEO Rod Phillips, Senior Vice President Beth Webster, and Director of Corporate Marketing Jeff Corcoran, who all made it their business to ensure the quality of the entire event. OLG, together with platinum sponsor Scientific Games; Gold sponsor Spielo International; and all our other sponsors were fundamental to the Summit’s success. Fallsview Casino Resort’s COO, A rt Frank, and his entire food and beverage department are to be applauded for working with us to produce a tremendous closing night awards reception and charity gala dinner and after-party.

The Niag ara Summit was the most content-r ich Su m m it ever. K ey not e spea kers Ro d Ph illips a nd MGM Resorts International Chairman and CEO Jim Murren set the table for extremely interesting and wellattended plenar y sessions, presentations, and panels dealing with OLG’s modernization strategy; including the plenary session dealing with governance ethics and contemporary issues chaired by William Dimma (Chair, Great Canadian Gaming Corporation) that included panelists Paul Godfrey (Chair, OLG), Clare Copeland (CEO, Falls Management Company), Renzo Francescutti 6 | Fall 2012

(National Partner-in-Charge of Ethics, Independence & Audit Risk Management, KPMG LLP); and so much more. The information and education programs included tracks dealing with charitable gaming, corporate social responsibility, gaming business and operations, iGaming, legal and regulatory, marketing and communications, secur it y a nd sur veilla nce, a nd spor t s bet ting.

Manufacturers and suppliers at the Canadian Gaming Summit all the latest products and services on display.

There were also great opportunities to get together including the Golf Classic, sponsored by AGEM and TCS John Huxley at the W hirlpool Golf Course; the ja m-packed opening reception, hosted by Caesa rs Entertainment at Elements on the Falls; the rocking opening after-par t y, hosted by BIS2 and K PMG at Margaritaville; and numerous parties and receptions.

Our closing event, the Canadian Gaming Awards Reception and Charity Gala, which raised $7,500 for the United Way of Niagara Falls and Fort Erie, was a celebration of excellence that formally recognized First Nations Canadian Gaming Award winners Gary Edgar (Mississaugas of Scugog First Nation), Patrick Armstrong (Casino Rama), Derek Suzack (Casino Rama), and Angeline Joe (Grey Eagle Casino); as well as Industry L eadership and Outstanding Contribution w inners Harry Oshanski (Casino Rama), Larry Flynn (OLG), and Darryl Schiewe (BCLC).

The success of the Summit really speaks to the depth and breadth of our industry and its ability to continue to function prof itably and grow – a success we will be celebrating again during next year's show in Montreal.

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coverstory

A New Age in Sports Wagering

Sports betting innovations in North America and beyond

By Matthew Bradford

coverstory

The players are set and the field is primed. Sports wagering is becoming big business in North America both online and on the casino floor, motivating providers to keep pace with latest trends or risk being sidelined for the big wins.

According to the Canadian Gaming Association's September 2011 report, the total amount of legalized sports wagering has risen ex ponentially since 2 0 0 0, sur pa ssing the $ 450 million mark in 2010 with average provincial win rates hovering at 40%.

And while brick and mortar facilities still rank high on the public radar, some of the most exciting evolutions in sports wagering are occurring in the online arena.

In the last decade alone, the advance of internet technologies and services has put sports wagering on the map and increased prof its for gaming stakeholders on both sides of the border.

“Canada’s growth rate in the area of internet wagering has matched that of the global growth rate since 2003. It is estimated internet gaming revenues in Canada will exceed 1 billion by 2012, of which 'betting' ranks third in terms of size, behind traditional casino activity and poker,” reads the report. “Unlike the global betting total, spor t is thought to

represent the la rg est component of the estimated Canadian betting tot al of close to $19 0 million of win. The win from sports betting on the internet in Canada is in the same range as the total win from the leg al spor ts products offered by all Canadian provincial gaming corporations.”

The numbers are clearly promising.

However, they pale in comparison to the estimated spend on illegal sports wagering; that is, bets made online with illegal sportsbooks headquartered outside of sanctioned provincial and state jurisdictions. As the report also states: “Given that the win rate for sports betting on the internet is likely in line with Nevada (5%), compared to about 40% for products legally offered by a provincial gaming corporation, total illegal internet sports wagering is likely in the $2 billion to $4 billion range compared to about $450 million for legal products currently available.”

Truly, player interest and a desire to combat illegal online sports wagering has been a driver for online betting Canadian Gaming Business | 9

coverstory sports betting platform to provide a much more robust and competitive site.”

The latest upg rades are par t of BCLC 's ongoing efforts to redirect traffic from illegal online gaming sites and offer players a feature-rich and legitimate online wagering experience. “Part of the rationale for BCLC moving into online gambling was the reality that British Columbians are spending hundreds of millions of dollars on off-shore competitors websites. We wanted to repatriate that money back to our province and keep that money within our jurisdiction. In order for us to do that, we have to be competitive against the competition, so that was major driver for us in terms of initially adding sports betting to our PlayNow.com.”

While sports betting may not be the bread and butter of PlayNow.com's business, it is a significant contributor – so much so that the BCLC plans to bring its winning PlayNow.com formula to Manitoba in the near future.

“Our growth year over year indicates that we're doing something right and our players like it. It's meeting our players' expectations, and delivering on the standards, the safeness, the securit y, the legalit y of what we're providing,” says Garvey. “We feel very strongly that the approach we're taking is correct.”

innovations among legitimate providers. A nd while provincially-run sites like Loto-Quebec's Mise-o-jeu are a strong example of where the industry is headed, initiatives like BCLC's PlayNow.com upgrade and Cantor Gaming's mobile gaming work in Nevada demonstrate more recent advances in the sports wagering field.

Upping the game at PlayNow.com T h is Ju ly, BCL C en h a nced it s on li ne g a me sit e, PlayNow.com, with the addition of more sports, leagues, tournaments, and innovative features such as live betting (aka “in-running” or “in-play” betting), which allows players to place live bets on specific in-game events and outcomes.

“Our players told us for a number of years that they wanted a more competitive sports betting option,” says Rhonda Garvey, VP eGaming with BCLC. “Based on our player feedback and demand, we have changed our 10 | Fall 2012

Paddy Power support Fuelling PlayNow.com's spor t s bet t ing evolut ion is Paddy Power, an Ireland-based company which provides BCLC's online gaming portal with the events, pricing, and risk management. Powered by teams of sports experts and quantitative analysts, Paddy Power uses human expertise and complex algorithms to set up sporting events from a trading platform hosted in Dublin. Once generated, these events and odds are then pushed to PlayNow.com, PaddyPower.com, PMU. fr in France, and to Paddy Power’s Australian business, sportsbet.com.au.

“The trader is actually trading only one event, but that event could be pushed to any number of clients,” explains Colm Sevastopulo, Head of B2B Operations with Paddy Power. “For example, in any given soccer match we could have 150 different betting options within that one event, but for the trader who's pricing up the event, he only has to enter in a few parameters and then our algorithms generate all of those bets accordingly.”

Paddy Power makes it possible for BCLC to provide both pre-match bets and in-play bets; the latter of which Sevastopulo notes is becoming one of the most popular products in the business as it allows fans to back a large variety of bets throughout a single match based on Paddy Power's odds. “In-play betting is the fastest growing product within sports betting because we're offering more of, and a wider variety of, betting opportunities through different types of bets, and a higher number of events.”

Sp e a k i n g t o o t her t r en d s i n s p o r t s w a g er i n g , Sevastopulo points to the rise of smartphones, tablets, and online streaming technologies; a mix of technology that is making it easier for players to wager whenever and wherever they prefer. “The combination of mobile and in-play betting is quite a potent one because you can be in a bar watching the game and you can then make a bet. The two complement each other extremely well.”

coverstory Taking the mobile lead in Nevada Advancements in mobile sports betting are also cropping up south of the border, specifically in Nevada where a bulk of the US's wagering takes place; and where companies like Cantor Gaming are blazing a digital trail with the development and support of online sports betting systems.

In 2005, the company became the first to be licensed as an operator and manufacturer of mobile gaming systems by the Nevada Gaming Commission, making it possible for players to engage in casino style games through an eDeck, a mobile tablet supplied by Cantor Gaming which can be taken anywhere within the resort it is issued in.

Since then, Cantor Gaming has continued to introduce innovations to the Nevada market. Last October, it launched an Android-compatible mobile sports wagering application, and this summer Cantor Gaming introduced an Apple-compatible mobile sports wagering application called Cantor Sports Book, which is currently available for all Apple devices. These applications allow sports wagering fans access to the entire spectrum of wagers and gaming products available in Cantor Race and Sports Books from their smartphones or tablets.

“Nevada regulations have long allowed that you could play sports outside of a casino property, but nobody really exploited it, and no one had ever done a really good job of actually building the technology to handle it,” says Lee Amaitis, CEO and President of Cantor Gaming, explaining, “We used the same system that was behind our mobile gaming technology and then we just expanded that footprint.”

Ask Amaitis and he'll tell you the real success story is what his company has done with its account wagering system, developed using a financial services model employing the type of algorithms that Cantor Fitzgerald, Cantor's global financial services firm, utilizes in its trading businesses.

“Our technology has given people the ability to bet on accounts, with money on deposit, through one of our computers in the sportsbook or their own tablet or smartphone and now laptops and PC’s anywhere in Nevada.

Now in Nevada, you can download our app and make wagers on the fly, or you can sit in the book and watch the games and make wagers there.”

Cantor's technology also supports in-play betting. Similar to PlayNow.com's offerings, Nevada sportsfans are presented with betting options throughout the match, be it the outcome of a field goal in football, a free throw in basketball, or a play in baseball. According to Amaitis, it's features like this, in combination with mobile technologies, that are not only rejuvenating sports betting for players, but revolutionizing the process by which it is conducted. “In the old system you had to push cash in the window, people had to count your money, you had to get your ticket, and you had to check your ticket. It was just impossible to be able to increase handle without adding significant output in terms of manpower and space, which is not what casinos actually do. If you eliminate the hurdle of paper, and eliminate the hurdle of having to actually put cash in the counter, you broaden the scope of the business by the factor of X. You create more jobs, you create more technology, you create a broader scope of handle, and you wind up with a system that is actually going to grow.”

And grow it has. Amaitis estimates that the state's handle will grow to $3 billion by the end of 2012 – a sizeable leap

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coverstory from its regular $2.2 billion take. “At the end of the day, that works for every jurisdiction that has legal gambling. If you're in a situation where you have legal gambling, you can take our system and duplicate the growth. It can increase wager size and volume by a lot. Most places that have legalized gambling are asking, 'How can we increase our tax rolls?'

We've probably already increased the tax rolls we're paying in Nevada by a significant amount of money.”

Backing the player With the rise of online sports wagering technologies comes concern over personal safety and regulatory boundaries.

Naturally, this is has become a core focus for all major players in the industry.

“We pride ourselves on the fact that we're a regulated jurisdiction, so the top priority is to ensure that we are a safe, secure, and responsible legal site,” says Rhonda Garvey with BCLC. “We have a regulator in the province of British Columbia, the Gaming Policy and Enforcement Branch (GPEB), who sets standards for us, and the standards are high. Through that, we can ensure our players are protected, and that there are responsible gambling features on our site that we continually evolve to ensure that players are protected by age restrictions and residents of British Columbia.”

Paddy Power also understands the importance of security and trust in the online environment, and is continually safeguarding these elements in all of its gaming markets.

“The key to having a good sports book or gaming site is that it's a safe and secure environment, and that customers can have trust in the site. That ranges from technical elements like knowing your customer and compliance with appropriate customer protection policies, to much more customer friendly elements,” says Sevastopulo, adding, “There's a very serious side to our operation, but there's also a fun side. We think we've hit a good combination

12 | Fall 2012

whereby our customers feel safe and secure, but also enjoy themselves.”

S t a t e s i d e , C a nt o r G a m i n g 's t e ch n o l o g y a l s o demonstrates an enhanced awareness of regulator y and securit y concerns. The company employs ISP tracking and wi-f i verif ication to ensure users of its systems are within the Nevada boundaries. Advanced soft ware is also used for age verif ication of online members, with remote sign-ups further safeguarded by a system whereby potential users are required to send a snapshot of themselves with a valid drivers license to be verified by a Cantor supervisor. Combined with enhanced password codes, lock-tight account securities features, and a constant eye for scammers, Amaitis says it's a system that has, and will continue, to uphold the industry's demands for safety, insisting, “We have had this system since March of 2009, and we've never had an issue of anyone being underage on our system.”

Future odds It's a brave new world for sports wagering. And if continued advancements in North America and overseas are any indicator, activity in the online scene is only starting to heat up. That said, advancements in online sports wagering don't necessarily spell doom for brick and mortar facilities.

In fact, says Gar vey, online components enhances the overall gaming experience, adding, “It's definitely complimentary to our bricks and mortar business, and the fact that we are responsible for all of gambling in British Columbia is our competitive advantage because we can use the online experience to encourage players to experience the casino, and vice versa. We've done some exciting things with our poker tournaments in terms of partnering with our casino locations to provide tournaments that start online, but then have the final table in an actual facilit y. A lso, casinos have show lounges and other entertainment options that we can provide to our online players. There's a lot of upside in terms of sharing that online experience.”

Looking ahead, Canadian providers may see even more changes with the introduction of Bill C-290, which would allow for wagering on the outcome of a single sporting event in Canada, as opposed to the parlay system it is governed by today. According to Garvey, should that change arise, BCLC will be ready: “We had already started changing our sports betting platform before this single game change was moving as actively as it is now. Should the Criminal Code be amended, we would definitely be looking at how sports betting offerings could be enhanced here at BC, so we'll be in a position that we can leverage that opportunity, should it come to fruition.”

specialsupplement

Helping Local Charities Win The revitalization of Ontario's charitable gaming industry

By Peter McMahon

A group of friends gather around a table for a night of fun. Talking and laughing, they sip drinks while their fingers tap at the screens positioned in front of them. Every now and then, a cheer goes up. The air crackles with excitement and the room is full of people.

Looking around, computer screens stretch across the length of the modern facility.

Would you guess they are playing bingo?

Welcome to the new face of charitable gaming in Ontario.

This industry transformation began more than six years ago, when the Ontario Lottery and Gaming Cor poration (OLG), the Commercial Gaming Association of Ontario (CGAO), and the Ontario Charitable Gaming Association of Ontario (OCGA), came together to tackle the huge challenge of how to breathe new life into the important provincial charitable gaming sector.

After all, when you say the word “bingo”, wh at comes to m ind? M aybe smok y halls, retired people, and someone with a microphone calling out letters and numbers?

While that may be the stereotype, it wasn’t a business model that we wanted to continue with, or one that would attract new players or offer excitement in terms of customer experience. Moreover, it did not represent the best that we could do, or have been doing, for Ontario’s charities.

14 | Fall 2012

“Thousands of charities and non-profits depend on charitable gaming to supplement their fundraising,” says Lynn Cassidy, Executive Director, OCGA. “Without these direct funds, many services and support programs in communities across Ontario would not exist.”

Commercial operators play an equally important role in creating a platform for providing both jobs and capital investment, and helping to sustain businesses through non-direct economic spin-offs like buying bingo supplies and sourcing food and drink.

What changes had to happen in order to protect these other important benefits?

This was the impetus for a real and unique partnership between the CGAO, the OCGA, and the OLG: to revitalize the industry in order to better support the thousands of charities and not-for-profits across Ontario, who remain the main beneficiaries of the net proceeds. Simply put, we wanted to ensure that charities could keep winning. So, starting in 2006, the partnership launched six sites to pilot new electronic forms of bingo.

D u r i n g t h i s t i m e , t h e s e s i x s it e s implemented a limited range of products, and commercial operators and charities worked side-by-side to evaluate the impact.

The feedback and lessons they provided were invaluable.

specialsupplement

“To date, it is estimated that the six pilot centres have already raised over $43 million for Ontario charities, which has exceeded our initial forecast.”

Charities and not-for-profits raised $161,000,000 in 2010/2011 from all forms of charitable gaming (bingo, BOTs and raff les). Think of all the women’s shelters, children’s services, children’s sports programs, health and disability services, educational programs, and food banks (to name a few) that rely on grants to provide their services. But how sustainable would this funding be if the charitable gaming model didn’t evolve?

Clearly, offering a new experience for charitable gaming demonstrated there was, and is, an opportunity to grow direct revenues for charities and communities. This allowed us to develop and obtain government approval for a broader re-configuration across the charitable gaming industry, hence the Revitalization of Charitable Bingo and Gaming Initiative.

To date, it is estimated that the six pilot centres have already raised over $43 million for Ontario charities, which has exceeded our initial forecast.

Enter: The Charitable Gaming Revitalization Initiative Developed after extensive research and consultation, the initiative focuses on three key business drivers: customer

More than $2000 was donated to the Food for Kids Program in Peterborough this past August. Pictured from left to right are Daryl Bennett, Mayor of Peterborough, Michael Orser, President of Penetanguishene-Huronia Bingo Inc., Chris McCarthy, Food For Kids Program Coordinator, Darrell Rowe, President of Kawartha Bingo Sponsors Association, Brenda Dales, Chair of Food For Kids, and Cam Johnstone, President of Delta Bingo.

service, facilities, and products. The goal was straightforward: By synchronizing efforts to deliver enhanced customer service in a place where customers want to spend their social time, and

by using a variety of new products and technology, the entertainment experience will change. And once the entertainment experience begins to change, the industry will also renew itself.

Canadian Gaming Business | 15

specialsupplement

(L-R) Michael Orser, President of Penetanguishene-Huronia Bingo Inc., Gerry Marshall, Mayor of Penetanguishene, and Bert Mason, President of Angel Gate Bingo Association help celebrate the 18th anniversary of Angel Gate Bingo with a cheque presentation representing the amount of money raised since April 1, 1994 by the charities at the bingo hall.

“We knew that the customer experience was evolving,” says Ms. Cassidy. “More and more, game play is taking place on electronic devices, so the key was to offer alternatives. By bringing new products and technologies into charitable bingo and gaming centres, we hoped to work with commercial operators and charities to invigorate the traditional bingo experience.”

To that end, a committee, made up of CGAO, OCGA, and OLG members was formed to develop concepts for phase one. Exciting games included an eBingo Base Gaming System, POD (Personal Play on Demand) games, BOT (Break Open Tickets) dispensing unit, eShutterboard, eInstants, eBOTs, and R apid Draw Bingo. A ll are currently played in traditional bingo – we just looked at a different delivery model by leveraging technology.

In order to allow the addition of electronic devices to traditional play, the revitalization model was structured as follows:

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• F i r st a nd foremo st , t he le g a l framework was changing under 207(1) (a) of the Criminal Code of Canada to allow charitable bingo and gaming centres to operate electronic devices.

• OL G w i l l f u l f i l l it s “conduc t & manage” responsibilit y through ser vices contracts with commercial operators, charities, and municipalities.

• C o m m e r c i a l o p e r a t o r s w i l l manage all day-to-day operations, providing facilities and renovation investment, staffing, site advertising and promotion, and customer care management.

• In exchange for a share of the proceeds, charities w ill have a meaning ful support role in the charitable gaming centre and will promote public awareness of how the funds raised benefit local charities and the community.

• Municipalities will maintain their current role and responsibilities for a share of the revenue.

Sig ning on to the eBingo initiative is about choice for cha r ities, operators, a nd mu n i c ip a l it ie s . No ch a r it a ble bi n g o a nd g a m i n g c ent re w i l l b e forc e d t o ch a n g e f r om t he c u r rent p a p er- b a s e d g a m e s t o the new model with the addition of electronic dev ices. But if all pa r t ies a g ree, the commit ment w ill begin w ith the commercial operators, as a sig nif icant investment is required.

Commercial operators have to ag ree to invest in upg rading their facilities, in staff training, development and demonstrated knowledge, and to implementing the Responsible Gambling pr o g r a m for t h i s i n it i at i ve i n combination with the OLG team.

Social responsibilit y has always been a critical component of the program.

Charities will see the license fees eliminated, signif icantly reduced

ex penses, and more manageable roles and respon sibi l it ies i n order to preser ve volunteer ism.

They will continue to play a critical role in the day-to-day operation of the facilit y in order to receive a share of the revenues.

While their en g a g ement w it h t h ei r c o m mu n it i e s has been tremendous, it h a s a l s o b e e n p o o r l y understood and the impact not fully realized. With this initiative, we wish to change that in order to present a higher prof ile of the remark able work these charities and non-prof its

Canadian Gaming Business | 17

specialsupplement undertake on a daily basis i n t he c o m mu n it ie s where they operate.

As before, municipalities will have a very important role, but w ith reduced administration.

They will also continue to receive revenues for administrative tasks, but through a contract with the OLG, rather than fees from charities.

For bingo centres that may not wish to implement full eBingo gaming, there will be some standalone products offered in the future while remaining under the current legal framework.

We have set out to enhance the entertainment ex perience for our customers by delivering a unique

“I am thrilled about the opportunities and differentiated set of products, facilities, and services you can’t find t h a t t h e C h a r i t a b l e G a m i n g in a casino, at a racetrack, or through Revitalization Initiative has created for all charitable bingo and gaming centres retail lottery. i n O nt a r io,” say s M ich a el O r ser, Executive Vice President, Boardwalk Making the switch We a r e v er y e x c it e d a b out t h e Gaming & Entertainment. “The level of Revitalization Initiative. With the collaboration between all stakeholders changes in place, we anticipate that, is unprecedented. Together, we are over time, we will create a stabilized com m it ted to prov iding a un ique char it able g aming industr y w ith ent er t a i n ment ex per ience for t he growth potential, a new entertainment benefit of our customers, the operators, experience that will appeal to current but most importantly the charities and customers and attract news ones, our communities.”

A nu mber of ot her ch a r it able and build a stronger industry brand.

Together, this will help develop strong bingo and gaming centres will also communities thanks to the ongoing transition during 2013. This switch work of the local charities and not- en able s pa r t ic ipat i n g ch a r it ie s t o for-profit groups that receive direct su st a i n a nd g row t hei r re venue s, benefits from the bingo activities and thereby building and supporting more can now implement an easier and more community programs, and generating local employment and communit ymanageable process.

The first targeted charitable bingo level economic benefits. And this does and gaming centre to switch over (part represent the best of what our industry of a group that will transition during the can do. late summer and fall) is Valley Bingo Centre, in Sudbury, which occurred at Peter McMahon is CEO, Commercial the end of August.

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specialsupplement

Executive Q&A:

Blair Connolly

VP of British Group Sales and Marketing

As VP of British Group’s Sales and Marketing Department, Blair continues to make waves in the gaming industry; specifically with the continual evolution and expansion of breakopen markets and complementary technologies through British Group’s latest division - British Group Interactive (BGI), and its flagship gaming platform – PlayLinxx™. For this issue, we asked Blair to share his insights on the charitable gaming industry in the Atlantic Provinces, and how he sees British Group leading the way.

What are the biggest trends driving charitable gaming in the Atlantic Provinces?

The most commonly referred to negative trends affecting charitable gaming in Atlantic Canada are an aging player base/demographic; lack of relevance for the younger, more digitally savvy demographic; repercussions of the smoking ban; and ever-increasing competition for consumer’s discretionary spend within and outside the gaming industry. These all remain prevalent and are of no surprise to anyone in the charitable gaming industry.

In addition, the proliferation of digital gaming, digital entertainment options, social media interactions, and an increasingly knowledgeable and savvy player base with ever increasing “value expectations” are the dominant trends influencing the gaming industry as a whole. Charitable gaming is feeling the impact of these forces albeit not to the extent of other sectors of the gaming industry.

Are there any unique challenges and/or advantages to delivering charitable gaming in the Atlantic Provinces?

Internet gaming and the age of social media has removed the boundaries that, not so long ago, separated Atlantic Canada from the rest of the world. With the expansion of cloud based gaming, players' 20 | Fall 2012

options have increased dramatically driving fierce competition amongst multi levels of gaming providers. While some in the industry may identify this as a daunting challenge, others who thrive on change and innovation will embrace the opportunity to deliver a greater player experience.

With a population base of around 2.5 million, Atlantic Canada does not boast the buying power of other more densely populated regions of North America.

From a critical mass perspective this certainly presents a challenge, however, with four similar but far from congruent provinces, each with their own identity, Atlantic Canada can be viewed more aptly as a microcosm of the North American charitable gaming market.

Lastly, I believe the single biggest downfall of charitable gaming is the lack of sizeable prize pools generating the level of attention and excitement that most other gaming products offer.

Linking Atlantic Canadian revenue in a novel, technologically advanced, secure manner with full integrity and a rich player experience delivers on this fundamental requirement. The challenge and opportunity rests in the delivery of the gaming platform, via technology that allows for mass distribution with intelligent, localized customization.

How has the delivery of charitable gaming/ bingo changed or evolved over the last 10 years?

In the past 10 years, there have been countless iterations of the traditional bingo game; from a host of electronic bingo options, social media adaptations, Bingo at a sporting event to an actual bingo themed national television show. It should be noted that certain regions are far more advanced as it relates to novel bingo offerings and their respective breakdown of the age old stigma of the product line.

In the UK , for example, where the marketing of bingo and other

gaming applications are far more overt and commonplace in the mainstream media, Bingo, through all its iterations, is as hot a commodity as any other g aming vehicle. W hy is this? In a word: marketing. Marketing changes, augments, influences, and drives cultural responses and is most powerful when it is executed and ref ined in a truly bi-directional sense. I don’t believe that any single bingo advancement has been the game changer in the industry but I am very encouraged and optimistic about the industry when I see such innovative risk taking approaches to a product and industry that so desperately requires it.

How is the British Group meeting the needs of today's players?

BGI’s competitive advantage is the symbiotic blending of traditional pull tab products with intelligent print capabilities and logistics, which, together, enable linked revenue, progressive prize pool opportunities and a holistic partner value model. Additional, incremental revenue streams are monetized via the digital media element of the overall platform (t h rou g h a dver t isi n g a nd pa r t ner programs), and the entire model is rooted in the overall player experience with integrity and security as the overarching governing principles.

BGI’s goal is to become the world’s leading supplier/provider of linked pull tab solutions - PlayLinxx™ - specializing in the supply of turnkey solutions for lottery and charitable gaming markets the world over. Vertically integrating every aspect of the business model/ gaming and entertainment platform, BGI is all about execution, performance, profitability, integrity, and social responsibility for all stakeholders.

This is a very exciting time for BGI. We do not view PlayLinxx™ as merely replacing existing equipment; rather we’ve embraced this gaming platform as an opportunity to rejuvenate and, in many

specialsupplement ways, reinvent the pull tab market.

We believe the pull tab market is at a crossroads. Failure to truly innovate and evolve runs the risk of significant market erosion; if not extinction.

The entire player experience – as it is currently presented - simply will not compete against countless other readily available digital gaming options.

Fact is, we live in a digital world and the core product that we have traditionally offered, no longer fits within this now ever more pervasive, digital gaming space. However, there is far more than meets the eye with this traditional product line. Through the introduction of ground-breaking, variable imaging t ech nolog ies a m a lg a m at ed w it h traditional print paradigms, BGI has been able to re-invent a product line and the fun has just begun. Enter the XL5, the new and exciting interactive gaming kiosk/dispenser as part of the PlayLinxx™ gaming platform; a true “category killer” in the pull tab segment of social /destination gaming and charitable gaming.

PlayLinxx™ will reverse the downward sales trend of pull tab tickets; both broaden

Untitled-2 1

the player base and re-engage lapsed player base by way of a unique, long term value based proposition; attract high value partners thereby driving incremental revenue and additional play value to the player; and truly partner with organizations deeply committed to the success of the pull tab line of business in a fundamental, invested manner. What's more, it will provide the option of a full, turn-key solution and rely on the partner to design, implement, execute and manage all aspects of the linked gaming platform; and do it all in a socially acceptable manner with security and integrity as the over-arching principles of any and all decisions.

From our corporate vision perspective, our primary focus has long been the

production and marketing of breakopen tickets to the Lottery, Charitable Gaming and Promotional marketplaces. While we remain focused on our core line of business and continue to expand our product offerings and market penetration, we remain equally focused on developing complementary technologies that will supplement, augment and enhance our core business. BGI is continuously challeng ing conventional w isdom, staying f luid with an ever-evolving gaming marketplace and digital-savvy g a ming buyer, to ensure our long term relevance in a marketplace that changes almost daily.

Founded in 1958 and incorporated in 1962, British Group (BG) is located in Mount Pearl, NL and has grown over the years with a core team of owners and managers with relevant experience in the Lottery and Charitable Gaming segments. BG holds Breakopen Lotter y contracts in several Canadian Provinces, namely with Atlantic Lotter y and British Columbia Lotter y Corporation. In the charitable gaming arena, BG is active in Atlantic Canada, 10+ US States, and the UK.

Canadian Gaming Business | 21 12-08-30 11:22 AM

corporateprofile

Bet Rite

Bet Rite began as the brain child of Richard Cone and Billy MacLellan, a pair of seasoned veterans in the Ca n adia n g a m i n g i ndust r y who recognized the need for a ser vice oriented gaming supply company focused solely on, and dedicated to, the Canadian gaming customer.

Since arriving on the scene, Bet Rite has partnered with world class gaming companies such as MEI, Interblock, Gar y Platt, and 3M, to provide a large selection of gaming products to their Canadian clients. Its focus is making the gaming f loor an exciting environment by providing casinos with unique solutions to their patron marketing efforts.

22 | Fall 2012

“Our philosophy is to seek out and partner with the best of breed vendors and suppliers who want a highly focused Canadian presence for their products and services,” explains Bet Rite President Richard Cone.

Equipped with one of the most ex per ienced ser v ice tea m in the business, Bet Rite is able to provide a r a n g e o f p r o g r e s s i v e d i s pl a y technologies, custom seating, slot bases, parts, and eye-catching custom casino signage and displays. The Bet Rite team has relationships and experience with most of the industry’s OEMs and gaming vendors, and as such they are able to supply a wide variety of product and service integration for clients.

“We often have customers who contact us looking for an integrated solution to a unique challenge on their floor, whether it is adapting displays for a specif ic promotion, a rework of their High Limit gaming floor or integrating technologies we have the expertise to give them a turnkey solution,” notes Billy MacLellan, Chief Operating Officer. “Because we are a fully registered gaming supplier we are able to offer a full range of services and products to our clients.”

One of the company’s most exciting lines of business is the fa mily of Interblock electronic table games. “We are seeing great customer acceptance and success with the new G4 line of multi-player gaming stations. Their wide range of configurations and multi-game play options are really hitting the mark,” explains Cone, adding, “These products are the perfect blend of traditional game play coupled with an ease of automation that brings in a younger demographic who is used to playing on-line but is looking for a real casino experience. They not only expand a client's customer reach, but actually enhance the live games performance.”

Richard Cone can be reached by phone (2 0 4) 792 - 8383, o r b y e m a i l a t rcone@betrite.ca. Billy MacLellan can be reached at (506) 962-1198 or by email at bmaclellan@betrite.ca.

For more information on Bet Rite, visit www.betrite.ca.

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Canadian Gaming

Lawyermagazine

Volume 5 Number 2 October 2012

High Stakes, Higher Expectation Honesty and Integrity in Canadian Gaming The State of Mobile Gaming | De-fine-ing the Law | Integrity in Sports and Single-Event Betting | US Table Games Patents Facing Unprecedented Challenges

MESSAGE FROM THE PRESIDENT

In my first President’s Message of 2012, I

wrote: “For the members of the International Masters of Gaming Law, the New Year has arrived with a bang. In December, it was announced that the United States Justice Department has reversed its longstanding position that the Wire Act prohibits all forms of on-line gaming.” With this momentous development came the anticipation that the United States finally would join Canada, parts of Europe, and elsewhere and embrace Internet gaming. The adoption of laws and regulations by several states that are designed to allow them to participate in the multi-billion dollar Internet gaming industry would suggest to some that legal Internet gaming in the U.S. is ready for prime time. But is it?

The U.S. Department of Justice’s opinion of September 11, 2011 that came to light at the end of 2011 seemed to open the door for Internet gaming in the U.S. for all forms of gaming other than sports betting.

But it left unanswered a number of questions. Absent the adoption of comprehensive federal legislation, those who recall the arrests of Internet gaming operators in the past remain guarded.

The global membership of IMGL brings an unparalleled level of expertise to address these difficult issues. Whether addressed in the very fine articles that appear in our four gaming law magazines – Casino Lawyer, Canadian Gaming Lawyer, European Gaming Lawyer and La Ley del Juego – with a worldwide readership in excess of 20,000 gaming lawyers and other gaming industry professionals – or our twice a year gaming law conferences, these leading sources of gaming law education are invaluable tools to help anyone involved in the gaming industry navigate these difficult issues now being faced in the U.S. I would add that our Autumn Conference in London from October 10-12, 2012, will include several sessions devoted to exploring the difficult issues surrounding Internet gaming in the U.S. In addition to the outstanding journals we publish and the conferences that we hold twice a year, IMGL will again host its immensely popular reception at G2E in Las Vegas on October 2. A few days after our Autumn Conference in London concludes, IMGL will be joining fellow IMGL members Santiago Asensi, Justin Franssen, Wulf Hambach and Quirino Mancini of the website portal GamingLaw.eu in hosting a reception at EiG in Barcelona on October 16. These by invitation only receptions, in spectacular settings, provide high level networking opportunities for IMGL members and their guests to meet with other important individuals actively involved in the gaming industry throughout the word and discuss the latest developments in gaming.

Please visit the IMGL website, found at www.gaminglawmasters.com. It is an invaluable source of all matters involving gaming law education and up to date details about IMGL activities, services and members. Also, please remember that you can always contact me at kduncan@joneswalker.com or our very able Executive Director, Melissa Lurie at imgldirector@aol.com.

Kelly Duncan kduncan@joneswalker.com

2 | Canadian Gaming Lawyer Magazine

Canadian Gaming

Lawyermagazine October 2012 Volume 5 Number 2

Publisher

Richard Swayze richards@mediaedge.ca

Editor

Michael D. Lipton, Q.C. mdliptonqc@dickinsonwright.com

Advertising Sales

Richard Swayze richards@mediaedge.ca

Senior Designer

Annette Carlucci

annettec@mediaedge.ca

Designer

Jennifer Carter

design2@mediaedge.ca

Production Manager

Rachel Selbie

rachels@mediaedge.ca

Circulation Manager

Lina Trunina

circulation@mediaedge.ca

Proudly published by:

Publisher Richard Swayze

President of the IMGL Kelly Duncan

richards@mediaedge.ca

kduncan@joneswalker.com

Editor Matthew Bradford

Executive Director, IMGL Melissa Lurie

matthewb@mediaedge.ca

IMGLDirector@aol.com

Canadian Gaming Lawyer is published twice a year as a joint venture between Canadian Gaming Business Magazine and the International Masters of Gaming Law (IMGL).

For advertising information, Contact Richard Swayze 416-512-8186 ext. 246 richards@mediaedge.ca

For editorial information, For editorial information: Contact Michael D. Lipton at mdliptonqc@dickinsonwright.com

Canadian Gaming Business Magazine is owned and published by:

Canadian Gaming

Lawyermagazine J. Kelly Duncan President Jones Walker Waechter Poitevent Carrere & Denegre, LLP New Orleans, Louisiana, USA +1 504 582 8218 kduncan@joneswalker.com Joerg Hofmann Vice President MELCHERS law firm Heidelberg, Germany +49 6221 1850 0 j.hofmann@melchers-law.com

J. Kelly Duncan

Joerg Hofmann

President

Vice President

Jamie Nettleton

Michael E. Zatezalo

Secretary

Treasurer

Jamie Nettleton Secretary Addisons Commercial Lawyers Sydney, Australia +612 8915 1030 jamie.nettleton@addisonslawyers.com.au Michael E. Zatezalo Treasurer Kegler, Brown, Hill & Ritter Co., L.P.A. Columbus, Ohio, USA +1 614 462 5400 mzatezalo@keglerbrown.com Douglas Florence Sr. Vice President, Affiliate Members Avigilon Las Vegas, Nevada, USA +1 702 683 6016 Douglas.florence@avigilon.com Keith C. Miller Vice President, Affiliated Educators Drake University Law School Des Moines, Iowa, USA +1 515 271 2071 keith.miller@drake.edu

Douglas Florence Sr.

Keith C. Miller

Vice President, Affiliate Members Vice President, Affiliated Educators

Tony Coles Immediate Past President Jeffrey Green Russell London, United Kingdom +44 20 7339 7000 arc@jgrlaw.co.uk Melissa Lurie Executive Director International Masters of Gaming Law Boulder, Colorado, USA +1 303 449 9955 IMGLDirector@aol.com Tony Coles

Melissa Lurie

Immediate Past President

Executive Director October 2012  |  3

4 | Canadian Gaming Lawyer Magazine

cover story

By Joseph Cohen-Lyons

High Stakes,

Higher Expectation The gaming industry relies significantly on the honesty and integrity of individuals for its successful and profitable operation. The nature of the gaming industry, and games of chance in particular, leaves casinos particularly susceptible to loss as a result of dishonest or fraudulent patrons. Furthermore, with large amounts of cash visible at any given time, casinos are uniquely vulnerable to loss as a result of theft.

Honesty and integrity is not only required by casino patrons, but also by the employees who are responsible for running the day to day operations of a casino. The employees are the gatekeepers to all of a casino’s cash and have the greatest opportunity to profit at the expense of a casino though dishonest conduct. For this reason, it is important that employees in the casino industry are held to strict standards of conduct.

In Ontario, the honesty and integrity of casino employees is maintained through a combination of government regulation and adjudicative application of employment and labour law principles which take into account the unique nature of the gaming industry. Government regulation allows for the screening of candidates to ensure only individuals who have a pristine record of honesty and integrity are permitted to become casino employees. Government regulation also allows for the monitoring of employees to ensure they continue to uphold such standards throughout the course of their employment. The careful application of labour and employment law principles ensures casino employees are held to a strict standard of performance and

allows casino employers to act swiftly in response to breaches of such standards.

Government Regulation of Casino Employees The Gaming Control Act, 1992 (the “Act”) requires that all casino employees whose duties involve access to a gaming facility where games are played, or part of a gaming facility that is not open to the public, register as “gaming assistants” with the Alcohol and Gaming Commission of Ontario (AGCO).1 The Registrar of the AGCO is empowered to grant or deny applications for registrations of a gaming assistant and, in doing so, is empowered to inquire into the applicant’s “character, financial history and competence” before deciding whether to grant an application.2 In this way, the Act works to ensure that only those with the highest levels of honesty and integrity are permitted to become casino employees.

The Act not only serves as a gatekeeper for those who wish to become casino employees; it requires individuals registered as gaming assistants to adhere to strict standards of conduct 3 and administer all games in accordance with the established rules of play.4 The

Act also allows the Registrar to inquire into and investigate the conduct of individuals who are currently registered as gaming assistants and employed in a casino. During such an investigation, the Registrar is again entitled to investigate into the character, financial history, and competence of the gaming assistant.5 If, following the investigation, the Registrar determines that the conduct in question jeopardizes the gaming assistant’s honesty and integrity, or otherwise brings the administration of the gaming industry into disrepute, the Registrar may suspend or revoke the individual’s registration. Such decisions are subject to a right to appeal to a Licence Appeal Tribunal, where the individual is entitled to an oral hearing.6 The registration and investigation procedures also allow for the suspension or revocation of a gaming assistant’s registration in situations where the misconduct in question did not occur during the course of employment. For instance, when the Registrar investigates the character, financial history, and competence of a gaming assistant, outside criminal convictions and credit reports may become relevant. This has led to the revocation of registration in situations October 2012 | 5

cover story where a gaming assistant has been convicted of theft, fraud, or any other crime that brings into question his or her moral turpitude.

The regulations imposed by the Act have the effect of providing a casino, as an employer, the ability to terminate an employee without notice in circumstances which may not justify summary dismissal in other industries. Since an individual is required to be registered as a gaming assistant in order to be employed in a gaming capacity at a casino, the loss of such a licence, even if as a result of offduty conduct, serves to frustrate the employment relationship by operation of statute. As such, the offending employee may be properly terminated from his or her employment at a casino. In other industries, an employee’s off-duty conduct is not generally considered to be the concern of the employer and, therefore, is often considered as insufficient grounds to justify termination for cause. Therefore, the termination of a casino employer who has lost his registration as a result of some form of off-duty conduct is a break from the general principles of labour and employment law, and represents a situation in which casino employers are given greater latitude to regulate the conduct of their employees.

Labour and Employment Law in the Casino Industry Courts and labour arbitrators have also played a vital role in ensuring that casino employees adhere to the high level of honesty and integrity required of their position. In particular, judges and arbitrators have imposed high standards of conduct for casino employees, and upheld terminations in situations which may not have justified summary dismissal in other industries. These higher standards have most often been imposed in the context of employee misconduct involving the handling of cash or failing to abide by the rules of play in games of chance.

The high standard imposed on casino employees, whose responsibilities include 1.

2.

3.

4..

S.O. 1992, c. 24; 5(1).

S.O. 1992, c. 24; 9(1).

S.O. 1992, c. 24; 19(2).

S.O. 1992, c. 24; 22(1).

6 | Canadian Gaming Lawyer Magazine

the handling of cash, is demonstrated by the decision in Windsor Casino Ltd. V. C.A.W. Canada, Loc. 444 (Faubert).7 In this case, a cashier was discharged for placing a $50 bill in the trash can. In support of the discharge, the employer relied on its zero-tolerance policy for theft or misappropriation. The Union, for its part, alleged that the cashier had mistakenly placed the $50 bill in the trash. After considering the evidence, the arbitrator ultimately determined the cashier’s explanation was implausible and upheld the discharge. In so doing, the arbitrator relied solely on the employer’s zerotolerance policy without considering the existence of any mitigating circumstances.

What is striking about the decision in Windsor Casino is not that the termination was upheld, but rather the conviction with which it was upheld. Theft or fraud is considered a serious employment offence in all industries, and arbitrators often consider a single incident to be sufficient to justify discharge. However, in most situations, it is incumbent upon an arbitrator to consider the circumstances surrounding the alleged theft, including the disciplinary history of the employee and the likelihood of recurrence, before determining whether discharge was an appropriate response. Furthermore, arbitrators are generally reluctant to blindly uphold a zero-tolerance policy without, at the very least, considering the circumstances surrounding the misconduct. In Windsor Casino, however, the arbitrator upheld the termination without any consideration of mitigating circumstances, relying instead on the employer’s zero-tolerance policy to justify the dismissal. Such an approach signals arbitral recognition of the importance of honesty and integrity in the casino industry and the high standards of conduct to which casino employees are held.

A similar result was reached in Great Blue Heron Charity Casino v. C.A.W. Canada, Local 444 (George).8 In this case, the casino terminated a dealer for allowing improper bets in a game

of chance, in contravention of the rules of play. After assessing the evidence, the arbitrator concluded that while the dealer had indeed improperly taken bets, he had not colluded with the player to defraud the casino. Nevertheless, the arbitrator upheld the dealer’s discharge and held that the dealer’s misconduct was not only dishonest, it brought the game and therefore the casino into disrepute.

The decision in Great Blue Heron demonstrates that adjudicators are not only concerned with the actual honesty and integrity of casino employees, but also with the public perception of such honesty and integrity. As recognized by the arbitrator in Great Blue Heron, games at a casino must not only be operated in a fair manner, they must be perceived by the public to be operated as such. Where an employee’s misconduct jeopardizes the public’s faith that a casino is operated fairly, he or she may be subject to discipline, up to and including termination.

As this article has demonstrated, casino employees in Ont ario are held to a relatively high standard of conduct as compared to employees in other industries. This high standard of conduct is achieved through two principle mechanisms: government r e g u l at io n a n d ju d ic i a l /a r bit r a l jurisprudence. The need for such a high standard of conduct in the gaming industry is clear: where the risks of loss as a result of misconduct are high, strict rules need to be in place to ensure that such misconduct does not occur. The fact the mechanisms exist to service this need is a testament to the adaptability of lawmakers and the development of labour and employment law through thoughtful jurisprudence. CGL Joseph Cohen-Lyons is an associate at Hicks Morley’s Toronto office. He represents and advises employers in all areas of labour and employment law, and has represented casino employers in matters before the Superior Court and Human Rights Tribunal. He can be reached at joseph-cohen-lyons@hicksmorley.com.

5. S.O. 1992, c. 24;9(1).

6. S.O. 1992, c. 24; 13(1)and(2).

7. (2007), 88 C.L.A.S. 230 (Crljenica) [hereinafter Windsor Casino].

feature

By Michael D. Lipton, Q.C. and Jack I. Tadman

De-fine-ing the Problem Provincial Prosecutorial Power, Self-Exclusion Agreements, and Pathological Gambling in R. v.

Trins1.Trins is a decision of the Provincial Court of Alberta (Alberta’s lowest court). Therefore, it does not bind any courts outside of Alberta, nor does it bind any other level of court in Alberta. It is an instructive decision, however, in that it illustrates some inherent difficulties with the validity and enforcement of agreements related to Voluntary Self-Exclusion Programs (“VSE”).

If adopted by other courts, Trins would appear to render voluntary selfexclusion agreements void due to a lack of consideration.

R. v. Trins “On April 10, 2010 Trins attended at Grey Eagle Casino, wearing a female styled wig and playing Baccarat in the ‘high limit room.’ Staff identified Trins, who cashed out and left the property. AGLC contacted Trins, who attended on May 13, 2010 and received violation ticket A10733030Z.” - Justice Lamoureux, Trins. 2 Facts On May 16, 2009, Len Trins signed an agreement to enter into the Alberta Gaming and Liquor Commission’s VSE. As part of the VSE, Mr. Trins was prohibited from entering any casinos or racinos for one year. In spite of the agreement, Mr. Trins was caught four times in casinos during his self-exclusion period. He received one warning and two tickets under s.

34.2(2) the Alberta Gaming and Liquor Act Regulations (the “Regulations”)3, which states: 34.2(2) No person who is enrolled in a self-exclusion program shall enter into or remain in licensed premises that are operated under a Casino Facility

License or a Racing Entertainment Centre Facility License.4 In Alberta, violating 34.2(2) of the Regulations could result in a fine of up to $10,000, up to six months in jail, or both.

Law: Consensus, Consideration, & Capacity Concerns over whether self-exclusion agreements are binding generally centre on one or more of the following issues: • Did the self-excluded individual understand the agreement (was there a meeting of the minds)?

• Did the self-excluded individual have capacity to enter the agreement (due to his or her gambling addiction)?

• Did the self-excluded individual offer valid consideration for entering into the agreement (did he or she give up something of value)?

Justice Lamoureux cited a lack of consideration in holding the VSE agreement was void. Alternatively, Justice Lamoureux held, the VSE agreement is voidable at law and may be terminated

by Mr. Trins. Evidence of Mr. Trins’s termination could be provided by a verbal communication of intention to rescind the agreement, written communication of the intention to rescind, or re-entering the casino. As part of her analysis, Justice Lamoureux went through the three elements of a valid agreement.5

Consensus ad Idem Entering into the VSE required Mr. Trins to sign a standard form agreement. The Court has a heightened duty to analyze whether the party who did not draft the agreement fully understands it. One of the preconditions to establishing a voluntary meeting of the minds, or consensus ad idem when dealing with a standard form agreement, is that the party providing the agreement must prove beyond a reasonable doubt that it has taken reasonable steps to bring any unusually onerous condition included in a standard form agreement to the attention of the other party. 6 In Trins, Justice Lamoureux held the risk of prosecution and fines which resulted from a breach of the VSE agreement was an unusually onerous condition.

The Court concluded there was no meeting of the minds bet ween Mr. Trins and the casino’s agent Mr. Alvio at the time Mr. Trins signed the VSE for following reasons: • Mr. Alvio merely pointed out the onerous clause to Mr. Trins, which fell short of taking all reasonable steps to point out the risk of prosecution and fines resulting from Mr. Trins breaching the agreement.7 • When questioned, Mr. Trins did not appear to appreciate the meaning of the word “prosecution” and its consequences.

October 2012 | 7

Feature Capacity Justice Lamoureux questioned Mr. Trins’s capacity to enter into the VSE. Though not formally diagnosed with a “gambling addiction” or pathological gambling, the Court seems to accept Mr. Trins’s evidence that he had been suffering from a serious gambling a d d i c t i o n fo r 15 y e a r s . Ju s t i c e Lamoureux also questioned how a person could enter into an agreement not to gamble, if, according to the DSM-IV-TR: Diagnostic and Statistical Manual of Mental Disorders, problem gambling is a mental illness.8 Valid Consideration What did Mr. Trins give up? Justice Lamoureux considered the argument that Mr. Trins gave up the right to enter into a casino (which would be a detriment to Mr. Trins’s freedom). However, Justice Lamoureux held that giving up the right to enter into a casino fails as consideration because: • there is no economic value that is reasonably attached to a notional right to enter a gaming venue;9 • exclusion as a notional form of consideration lacks the necessary suf f icienc y a nd cer t a int y to be recog n ized in law a s va lid consideration10.; and • the casino cannot be inferred to be bargaining for the right to exclude patrons, as this is contrary to the financial interest of the casino.11.

Future Considerations “One cannot argue that problem gambling is a real and serious mental illness while affirming in the same breath that such a mentally ill person can voluntarily

self-exclude through contract.”12 Emir Crowne, Food for Tort at 170-171.

Provinces have prosecutorial power under provincial gaming legislation. As noted earlier, violating 34.2(2) of the Regulations could result in a fine of up to $10,000, six months in jail, or both. Is it an appropriate use of provincial prosecutorial power to (i) impose financial hardships on individuals who have likely lost a substantial amount of money gambling, and (ii) imprison individuals for an inability to control an addiction/ impulse control-disorder?

Without enforcement mechanisms, selfexcluded gamblers are free to repeatedly return to the casino without consequence.

Some self-excluded gamblers have been labeled “prolific violators” in a recent review by the British Columbia Centre for Social Responsibility (“BCCSR”) of the British Columbia Lottery Corporation’s (“BCLC”) VSE program.13 “Prolific violators” attempt to access casinos on a regular basis, do not take advantage of resources offered to them, and cause a substantial amount of work for casino staff.14. Self-excluded gamblers who have repeatedly attempted and been successful entering gaming facilities have, on occasion, sued those gaming facilities.15 The pur pose of f ining and imprisoning individuals who breach self-exclusion agreements is to deter those individuals from entering the casino. However, the use of punishment as a deterrent is based on the premise that people act rationally. A person usually entering into a VSE does so because he or she is not able to act rationally (he or she is not able to control his or her gambling). In fact, one of the indicators of pathological gambling under the

1 . 2012 A.B.P.C. 156 [hereinafter Trins].

2. Ibid. at para. 2.

3. Gaming and Liquor Regulation, Alta. Reg. 143/1996.

4. Ibid., s. 34.2(2).

5. Supra note 1 at para 12.

6. Tilden Rent-a-Car Company v. Clendenning, 1978 CarswellOnt 125, cited in Trins at para 7.

7. Supra note 1 at para 7.

8. Pathological gambling was first recognized as a clinical disorder by the American Psychiatric Association in 1980 in the DSM-III. The criteria for determining pathological gambling were the same as substance abuse, save for the fact that one of the indicators of pathological gambling was “chasing losses”. Pathological gambling is in the DSM-IV as an “Impulse Control Disorder Not Otherwise Classified.” The most recent draft of the DSM-V (scheduled to be released in May, 2013) would add a new category of “behavioral addictions,” containing one disorder: gambling addiction.

9. Emir A. C. Mohammed, “Food for Tort: Giving the Casino Some Consideration, a Continued Defence of the Gaming Industry,” (2009) 27 Wind Rev Leg and Soc Issues 169 at 169-170.

8 | Canadian Gaming Lawyer Magazine

Diagnostic Statistical Manual of Mental Disorder (DSM-IV-TR) is “repeated unsuccessful efforts to control, cut back, or stop gambling.”

It would seem to violate the spirit of VSE programs to fine and imprison individuals who elect to self-exclude due to their difficulty controlling gambling.

It would also seem to violate the spirit of VSE programs for individuals who breach the VSE agreement, often employing deceptive tactics, to sue the casino for failing to exclude them. Trins highlights the reluctance of the court to hold that a VSE agreement constitutes a valid contract.

Instead of a valid contract, it may be useful to conceptualize the VSE agreement as an acknowledgement by self-excluding individuals to agree to certain obligations and forego certain rights. BCCSR’s report recommended increasing the psychological barriers to casino re-entry16. If these psychological barriers provide a useful enforcement mechanism against violators of VSE programs, perhaps provincial regulatory authorities will be less likely to charge violators with offences under gaming control legislation. CGL Michael D. Lipton, Q.C. is Head of the Canadian Gaming Law Group of Dickinson Wright LLP in Toronto. Michael is a founding member and past president of the IMGL, and has been recognized by his peers in “Chambers Global” for excellence in Gaming Law. Michael has also been recognized by his peers in “Best Lawyers in Canada” for Gaming Law. Jack Tadman is an Associate Member of the Canadian Gaming Law Group of Dickinson Wright LLP in Toronto. They can be contacted at mdliptonqc@dickinsonwright.com and jtadman@dickinsonwright.com, respectively.

10. Ibid.

11. Alina Slavina, “Don’t Bet on it: Casinos’ Contractual Duty to Stop Compulsive Gamblers from Gambling,” (2010) 85 Chicago-Kent Law Review 369 at 379, cited in Trins.

12. Supra note 9 at 170-171.

13. “Report Recommends ‘Prolific Violators’ of VSE Agreements Be Removed From Program,” August 25, 2011, BCLC on Responsible Gambling retrieved August 1, 2012 at http://blogs.bclc.com/2011/08/25/reportrecommends-prolific-violators-of-vse-agreements-be-removed-from-program/.

14. Ibid.

15. See, for example Treyes v. Ontario Lottery and Gaming Corp., O.J. No. 2772; Dennis v. Ontario Lottery and Gaming Corp., 2010 ONSC 132, 16. Examples given by BCCSR include mandatory counseling or participation in a gaming workshop, and extension of the self-exclusion period for anyone breaching the self-exclusion agreement between one and nine times. At the tenth violation, the VSE agreement would no longer be of force and effect, and individuals would not be permitted to re-enroll for at least a 3-month period.

feature

By Danielle Bush

Integrity in Sports and

Single-Event Betting in Canada Sports betting in Canada is about to change significantly. Bill C-290 (an Act to amend the Criminal Code (sports betting)) is presently before the Senate for final consideration before it receives Royal Assent and becomes law (likely in October 2012). The Act will repeal s.200(4)(b) of the Criminal Code (the “Code”) in its entirety and thereby remove, amongst other things, the prohibition against betting on “a single sport event or athletic contest”. At present, the provision of sports betting services falls exclusively within the purview of provincial lottery corporations and so to date most of the legal sports betting taking place in Canada has been through provincial government products such as Sport Select, ProLine, and Mise – O-Jeu. Given that Bill C-290 has all-party support, it can be concluded that there is general enthusiasm for the proposed change amongst the majority of provincial governments and their respective lottery corporations. It is therefore likely that provinces such as British Columbia (“BC”), Ontario and Quebec will now move into the sports betting space, and particularly the online sports betting arena, relatively aggressively.

Match-fixing is considered to be a particular threat in any sport or league where the players and/or officials are young and/or underpaid and are therefore susceptible to bribery and extortion.

For that reason, many jurisdictions, where sports betting is otherwise legal, do not permit betting on the performance of teams who are composed of underage players. It appears that this is frequently a matter of negotiation between operators and leagues. For example, in 2004, Loto-Quebec found itself in the middle of a public dispute with the Quebec Major Junior Hockey League (“QMJHL”). Because of the work stoppage in the National Hockey League (“NHL”) that year, Loto-Québec (through Mise-O-Jeu) had started, once again, to accept bets on the outcome of QMJHL games as an alternative to NHL action.

It had previously stopped accepting such bets because the league had too many under-age players but apparently needed to replace the NHL revenue with another hockey stream. The QMJHL stated at the time that it was very concerned about the integrity of

the league because a third of their players were 16 or 17 years old.

Loto-Quebec halted betting on the league after only three days of betting.

United Kingdom Match-fixing is viewed by most developed countries as a major threat to the integrity of sports in general, and to specific sports such as soccer and cricket in particular. Individual countries have responded to a greater or lesser extent, perhaps reflecting the prominence of sports betting in their cultures. As one would expect, the United Kingdom (“UK”) has been one of the most proactive jurisdictions in this arena. One of the mandates of the UK Gambling Commission is to keep crime out of gambling.

The Commission licenses betting operators who must comply with licence conditions, including condition 15.1 which requires operators to provide information regarding suspicious activity to the Commission and/or the relevant sports governing body October 2012 | 9

Feature

“The level of (legal) sports betting in this country has been minimal to date and so attempts to throw games for betting purposes is perceived as unlikely.” (“SGB”). Importantly, “cheating” is an offence under s. 42 of the UK Gambling Act 2005 and the Commission has the power to void bets, or to temporarily stop winnings being paid out in certain circumstances. In response to concerns about match-fixing in tennis, football, and cricket, the UK Gambling Commission brought together a panel (including representatives from sports betting operators William Hill, Ladbrokes, and Betfair) to report on sports integrity.

The panel’s report (the “Parry Report”) was released in February 2010. It included recommendations (i) for the UK government including clarifying the definition of “cheating”, (ii) for SGBs, including a new Code of conduct on integrity in sports in relation to sports betting to include minimum standards that all sports have to observe and cover in their rules on betting, a requirement that each SGB have effective mechanisms in place to ensure compliance with its own rules, investigate potential breaches and to impose sanctions, formation of a body that is responsible for the governance of the applicable sport in the UK, and that each SGB put in place mechanisms for recognising and capturing intelligence in relation to sports betting integrity and communicating it to the government’s Sports Betting Intelligence Unit (“SBIU”); and (iii) for betting operators, including varying betting terms and conditions to make the contravention of sports or other professional rules on betting a breach of the operator’s own terms and conditions; and (iv) regarding creation of a SBIU. The Panel also recommended that licence condition 15.1 be amended to provide for more consistency and transparency around the decisions to report under 15.1 and to ensure betting operators and SGBs continue to exchange information in real time to improve the flow of intelligence to the SBIU so that suspect betting patterns are identified as quickly as possible.

Following the release of the Parry Report, the UK established the SBIU which, as recommended, receives intelligence generated by a number of sources including SGBs and operators, analyses it, makes connections and identifies patterns. One of its functions is to monitor the betting activity of individuals associated through intelligence with potential or actual betting corruption in real time. The SBIU does not monitor movements in the betting market itself but instead relies on the reporting of the betting operators for this purpose.

Canada In Canada, there is no equivalent to the prohibition against cheating found in the UK’s Gambling Act. In fact, it is not clear whether match-fixing constitutes an offence in this country. A review of the Code does not disclose any obvious 10 | Canadian Gaming Lawyer Magazine

avenue for laying charges in this situation. Perhaps the closest one could come is a charge of fraud under s.380 of the Code on the basis that the participants (the player and the bettor who was paying the player) had defrauded the gaming operator that paid out to the bettor on a fraudulently achieved outcome. There is also the possibility of charges under s.426 which governs secret commissions. However, it is clear that obtaining a conviction under either one of those sections in a match-f ixing situation would be difficult. This may explain why each of the RCMP, the OPP and the Toronto Metropolitan Police have taken the position (verbally in response to telephone enquiries) that their force was not responsible for match-fixing activity.

As well, the various Canadian sports leagues have not been responsive to enquiries about how they do (or would) handle match-f ixing. This may be in part ex plained by the fact that the level of (legal) sports betting in this country has been minimal to date and so attempts to throw games for betting purposes is perceived as unlikely.

That situation is likely to change sooner rather than later, given that a number of lottery corporations are interested in providing single event sports betting. In particular, the BC Lottery Corporation’s partnership with sports betting giant Paddy Power suggests that single event betting is likely to be available in BC as soon as the Code and BC lottery legislation are amended as needed.

Provincial lottery corporations that provide any form of sports betting are equivalent to the UK gaming operators that are required to report suspicious betting activity under UK licence condition 15.1. Given that we are now at a point where the integrity of Canadian sports may be adversely affected by the activities of provincial lottery corporations, it is time for the various players, including the federal government (re amending the Code to add a “cheating” offence), the provincial gaming regulators and lottery corporations (as operators), and the various SGBs (e.g., FIFA and the Canadian Soccer Association), to put in place a structure based on the UK model before a scandal makes the need for oversight all too apparent. CGL Danielle Bush, a partner at the law firm of Chitiz Pathak LLP, regularly advises clients in the gaming industry on a broad range of regulatory issues.

Ms. Bush also has significant experience in corporate and commercial legal matters particular to land-based and online gaming companies, including mergers, restructuring and technology licensing. Ms. Bush can be contacted at dbush@chitizpathak.com.

feature

By Stuart Hoegner

The State of Mobile

Gaming in Canada The rise of mobile gaming is not something that is coming; it is upon us. The amount spent on mobile games worldwide is expected to reach $11.4 billion by 2014 (more than doubling from $5.6 billion in 2010).1 Right now, there are 500 million smartphone owners globally. By 2015, the number of owners is projected to triple to 1.5 billion.2 We are in the middle of a growth spurt.

Gaming suppliers, developers, and operators must have a strategy for addressing this medium or a very strong reason for avoiding it.

October 2012  |  11

FEature While smartphone ownership in Canada is significant and growing (ownership ranging from 38% among the NGen cohort to 15% among those 65 and older),3 the mobile gaming picture is more nuanced. Perhaps unsurprisingly, 65% of NGen’ers and 54% of GenX’ers play games on mobile devices by themselves. However, a mere 2% of NGen’ers and 1% of GenX’ers play networked games with others on their mobiles.4

Who’s Astride the Canadian Stage?

Some of the provincial monopolies have tentatively dipped their toes into the mobile gaming pool, most notably Quebec. LotoQuébec has iPhone and Android apps available to prepare selections on Quebec sports betting offerings and to place bets (through www.espacejeux.com) and to buy and check lottery tickets. British Columbia, through BCLC, is not developing a mobile application, but has plans to optimize www.playnow.com for viewing on webenabled mobile devices. (BCLC is still exploring the scope of this project.) The Atlantic Lottery Corporation, which offers games on behalf of the four Atlantic provinces, allows players to check winning lottery numbers and other items by means of mobile alerts.

If their objective is to service the demands of the gaming public and look to where wagering is going, government providers might be well-advised to shift into a higher gear. Mobile gaming is on the rise and will only be in greater demand, and operators like PokerStars and Bodog have more user-friendly, sophisticated, and functional mobile options available to Canadian wagerers.

The Legal Status of Mobile Gaming in Canada We shall return to what this means for mobile product development and delivery, but first a few words on the law of mobile gaming.

In Canada, the Criminal Code prohibits all but the governments of the provinces from conducting and managing what’s termed a “lottery scheme” (but which generally includes such gaming as sports betting, casino games, and poker) “on or through a computer.”5 Thus, Internet gaming — according to the Code, at least — must be conducted and managed by the provinces.6 Though there is no case law (yet) on point, the same logic appears to apply to mobile gaming. At a basic level, such wagering is operated “on or through” computers, and must therefore be conducted and managed by the provinces.

Some of the same issues that online gaming operators must grapple with in Canada crop up in mobile gaming, e.g., the threshold issue of jurisdiction. Under the Code, and with many important exceptions, a person is not to be convicted “of an offence committed outside Canada”.7 The issue is whether private foreign (mobile and Internet) gaming operators accepting business from Canadians are potentially committing offences that are not “outside Canada.” I have written in this magazine before about selected jurisdictional issues in i-gaming.8 Whether Canadian courts will assert jurisdiction where mobile gaming operators have little or no nexus to Canada — other than their customers being here — is very much a live issue. That said, I take the view that Canadian courts will not likely hesitate to intervene and make use of the Code in appropriate mobile gaming cases, even if only an operator’s customers are in Canada. Mobile gaming operators must also pay attention to advertising restrictions under the Code and under applicable provincial legislation.

As with land-based and online platforms, the Canadian Competition Act9 also addresses gaming, including mobile gaming.

Among other things, contest promoters must make adequate and fair disclosure about certain contest particulars and must not unduly delay the distribution of prizes. Mobile gaming operators and advertisers will also do well to consider, for example, the implications of Canada’s anti-spam legislation10 and the Personal Information Protection and Electronic Documents Act.11

Mobile is Different One common assumption supposes that mobile gamers want the same games as online gamers, only ‘fitted’ for a mobile device. This may be true for a segment of the gaming universe, but at least one pioneer in mobile gaming, Charles Cohen of Probability Games, suggests that the experience mobile users want is very different.

According to Cohen, many mobile users want “a distraction, a sideways glance, a momentary lapse of concentration.”12 His data suggests that the average mobile play session is 10–15 minutes.13 These data points, along with the paucity of Canadians playing networked games on their mobiles to date, may spell bad news for games like poker being played on mobile devices. However, it may work out fine for sports betting. It may also give a push to innovation in mobile gaming and lead to more efforts to monetize wagering activities in skill-based video games, social gaming, and gaming requiring less of a time and learning commitment. This cross-over of sorts between traditional console video gaming, casino, and other money wagering could be the next part of mobile development.

We will not have to wait long to see where the mobile sector is going. Attention to legal and institutional structures — though such structures are likely inadequate to comprehensively deal with mobile gaming — and to market demands will pay big dividends in the mobile gaming space, both in Canada and internationally. CGL Stuart Hoegner is a gaming attorney, accountant, and IMGL member in Toronto, Canada. He writes a regular blog on gaming law and has been widely published in tax and gaming journals in Canada and internationally.

He can be reached at stu@gamingcounsel.co.

1. Jeff Beer, Rise if Mobile Gaming Surprises Big Video-Game Developers, Canadian Business, available at http://www.canadianbusiness.com/article/75215--rise-of-mobile-gaming-surprises-big-video-game-developers; Gary Beal, The Future of Mobile Gaming and Financial Markets, World Online Gambling Law Report, July 2010, at 14.

2. Beer, supra note 1.

3. Delvinia Interactive, Managing the Hype: The reality of mobile in Canada, April 2010, at 5, available at http://www.techvibes.com/blog/managing-the-hype-the-reality-of-mobile-gaming-in-canada.

4. Ibid., at 13.

5. Criminal Code, R.S.C. 1985, c. C-46, s. 207(4)(c).

6. It has been said before, but bears repeating, that there is a tension between the Code’s provisions on this point and the rights of Canada’s aboriginal peoples to conduct and manage gaming from their territories. This point will not be explored further here.

7. Supra note 5, s. 6(2).

8. Stuart Hoegner, Further Thoughts on Jurisdictional Issues in Canadian Internet Gaming: How Far Is Close Enough? Canadian Gaming Lawyer, Fall 2011, at 8, available at http://gamingcounsel.co/pdf/CGL_ fall_2011_final.pdf.

9. Competition Act, R.S.C. 1985, c. C-34.

10. An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radiotelevision and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act, S.C. 2010, c. 23.

11. Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5.

12. David Briggs, A Candid Discussion on Mobile Gaming, Casino Enterprise Management, August 2012, at 32, available at http://www.casinoenterprisemanagement.com/articles/august-2012/candid-discussion-mobilegambling.

13. Ibid.

12 | Canadian Gaming Lawyer Magazine

FEature

By John Artz

U.S. Table Games Patents

Facing Unprecedented Challenges Blackjack, craps, roulette, poker, and baccarat are table games that have entertained gamblers around the world for hundreds of years.1 To enjoy blackjack, poker and baccarat, all one needs is a deck of cards and an understanding of the rules. Similarly, craps and roulette can be readily enjoyed by one armed with knowledge of the game and dice or a roulette wheel, respectively. The simplicity of these games likely contributes to their strong popularity and, despite their long histories, they are still played in virtually every casino around the world. The success of these games has inured to the benefit – including through revenue generation – of the proprietors who have made these games available.

While these table games are still widely successful, n e w t a ble g a m e s a r e c on s t a nt l y b ei n g e x plor e d , developed, and introduced with the hope that they can capture at least some of the same success (and revenue) as the prior long standing table games. Success in the gaming industr y, however, is not only predicted on the popularity of the game itself, but often resides in the abilit y of a company to obtain a patent and thus exclusively manufacture, market, and sell the game.

Accordingly, most companies seek to secure patents for any table and card game developments in the hopes they can avail themselves of these signif icant benef its.

However, the United States Patent and Trademark

Off ice (USPTO) has begun to question whether table games are the proper subject of a patent.

The traditional blackjack, craps, roulette, poker and baccarat games – which all predate the U.S. patent system – are not the subject of U.S. Patents. However, over the last t went y years, the USPTO has awarded patents to inventors for various improvements and variations of these traditional games. For example, over that period, patents have been awarded for brand new table games which incorporate different rules and set ups 2 , improvements on existing table games 3 , and new betting options and/or payouts for existing games 4 . Like with most developments, the owners of these patents October 2012 | 13

feature hope to take advantage of the exclusivity they afford in the event the patented game experiences success in the marketplace.

As is known, the patent system will reward any person with a patent who invents “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof ” as long as the other conditions for patentability are satisfied. 35 U.S.C. §101. As indicated above, inventions for new methods (processes) of playing card games or other table games have been uniformly accepted by the USPTO for the last couple of decades, without any objection as to whether they constitute patentable subject matter. Now, however, the patentability of table games and card games in the U.S. is under attack with the USPTO beginning to reject patent applications directed to table game methods under the premise that some are directed to non-patentable subject matter. 5 Part of the attack stems from a recent decision of the United States Court of Appeals for the Federal Circuit (“CAFC”) – the court having exclusive jurisdiction over any appeal involving patents. In that case, In re Bilski, 545 F.3d 943 (Fed. Cir. 2008), the CA FC considered the issues of when method claims qualify for patent protection in the U.S. In Bilsk i, the court held that patent claims directed toward a method of hedging risks in commodities trading were not patentable as they constituted an abstract idea. In so doing, the court relied on the machine-or-transformation test, which essentially provides that a claim needs to recite some kind of a machine or some sort of transformation to qualify for patentability. 6 In response to the Bilski decision, the USP TO ha s issued g uidelines to it s examiners as to how to evaluate whether method claims constitute patent able subject matter, including the machine or transformation test.7 While the Bilski decision dealt with business method pat ent s , t he USP TO h a s t a k en t he p o sit ion t h at the decision also applies to table game methods. Of particular interest is the fact that the USPTO continues to issue patents for table and card game methods that are played in an electronic environment, such as on an electronic gaming device or over the Internet. The USPTO apparently believes that an electronic version

1. Blackjack dates back to England and at least the 1700s. http://www.casino.org/games/blackjack/history.php.

Craps dates back to at least 17th century France with modern day craps taking shape in America in the 19th century. http://www.worlds-best-online-casinos.com/Articles/craps-history.html. Baccarat was introduced in France in the late 1400s. http://www.gambling-baccarat.com/baccarat_history.htm. Roulette appears to date back to England in the 1500s and may have origins all the way back to Ancient Rome. http://www. casinonavigator.com/games-strategies/roulette-history/. Poker is thought to have its origins in France in the 15th century. http://www.cardschat.com/poker/history/.

2. See e.g., U.S. Patent No. 5,997,002.

3. See e.g., U.S. Patent Nos. 6,702,289 and 8,128,472.

4. See e.g., U.S. Patent Nos. 5,788,574 and 6,450,500.

14 | Canadian Gaming Lawyer Magazine

of these table games employs a machine (i.e., computer) and thus electronic table games constitute patentable subject matter. However, according to the USPTO, the identical table game method performed in a gaming f loor environment does not satisfy the requirements for patentability. Thus, a company that invents a new table or card game can secure a patent for the electronic version, but not the version played on the casino f loor.

A review of the USPTO records indicate that owners of many patent applications that seek protection for the f loor version of new table games, are of the opinion that the USPTO has incorrectly denied them patent protection.

Accordingly, many have filed appeals within the USPTO. In support of these appeals, many claims directed to card games in a non-electronic environment specifically recite structure in the form of the playing cards themselves, which arguably satisf ies the machine portion of the machine-or-transformation test. Alternatively, many claims directed to card g ames in a non- electronic environment recite transformation of the playing cards, e.g., dealing hands (some face up, some face down), dealing further cards, drawing cards, and f lipping cards over, any of which arguably satisfy the transformation portion of the machine-or-transformation test.

Most of these appeals are still pending and are awaiting a decision. To the extent any decision requires a review outside of the USPTO, an appeal to the Federal Circuit is also available. While the belief is that these appeals will ultimately be successful, there are no guarantees; and in any event, a final resolution still appears to be a couple years away. In the short term, companies will likely face challenges securing patent rights and the exclusivity afforded thereby for new table or card games. To address this issue, patent applicants could limit the claims to an electronic environment. Alternatively, patent applicants should look for creative ways to include structural element s in the cla ims, such a s the t able, bet t ing implements or other features attendant to the game.

John Artz is a partner in the Intellectual Property Practice Area of Dickinson Wright PLLC and is co-chair of the Firm’s Intellectual Property Litigation Group. He is also a member of the Firm’s Gaming Practice Group. John can be reached at jsartz@dickinsonwright.com.

5. This issue applies only to table game methods that are played in gaming establishments, such as casinos, and not the identical method played on an electronic device or the Internet. The USPTO has determined that the electronic versions of table game methods employ structure (i.e., a computer) that is not present in the table game version. Indeed, the USPTO continues to issue patents for inventions related to such games played in an electronic environment.

6. The Supreme Court affirmed the CAFC decision, but held that the machine-or-transformation test is not the sole test for determining patentability as other criteria for making this determination were also available. Bilski v. Kappos, 130 S. Ct. 3218 (2010).

7. http://www.uspto.gov/patents/law/exam/bilski_guidance_27jul2010.pdf.

2012-2013 EVENTS I N T E R N AT I O N A L

CONFERENCES 2012 Autumn Conference OCTOBER 10-12, 2012

IMGL Member Reception OCTOBER 2, 2012

2013 Spring Conference TO BE ANNOUNCED

5:00 – 7:00 p.m.

La Cave, Wynn Las Vegas Las Vegas, Nevada

SEPTEMBER 29 - OCTOBER 1, 2012 co-located at Le Grand Hotel, Oslo, Norway All gaming professionals are welcome to attend.

A registration fee applies.

O F

G A M I N G

Strictly by invitation for members and their guests.

Visit us at Exhibit Booth #3911

Welcome Reception OCTOBER 10, 2012 Sofitel St. James London, United Kingdom

All female gaming professionals are welcome to attend.

L A W

2 0 1 3 E V E NTS

2 0 1 2 EVENTS

Sofitel St James London, United Kingdom

2013 Autumn Conference OCTOBER 1-3, 2013

M A S T E R S

Luncheon OCTOBER 12, 2012

Included in the London conference registraton fee. Event tickets available for purchase.

IMGL Member Reception OCTOBER 16, 2012 7:00 - 9:00 p.m.

Opium Barcelona Barcelona, Spain

Strictly by invitation only for IMGL members and guests of GamingLaw.eu

Co-sponsored by GamingLaw.eu

IMGL Reception FEBRUARY 3, 2013

Pool Area, Haymarket Hotel London, UK Co-sponsored by Jeffrey Green Russell

IMGL Reception MAY 21, 2013

Portofino Restaurant The Venetian, Macau Co-sponsored by GLI Visit us at Exhibit Booth #203

For more information, contact IMGLdirector@aol.com or visit www.GamingLawMasters.com

Why take a chance?

At Dickinson Wright, we guarantee a full house of experienced gaming attorneys - more than 25 lawyers who actively represent gaming interests from strategically located offices in Washington, D.C., Toronto, Detroit and Lansing.

Pictured here, clockwise from top left: Robert W. Stocker II, Michael D. Lipton, Peter H. Ellsworth, Dennis J. Whittlesey Robert W. Stocker II and Michael D. Lipton are Tier I gaming attorneys in Chambers Global and all four lawyers pictured here are listed in 2009 Best Lawyers in America.

We provide a full range of highly sophisticated legal services addressing the complex array of commercial gaming issues, as well as issues unique to Native American casinos and related facilities - another reason Dickinson Wright has earned its superior international reputation.

Contact: Robert W. Stocker II at rstocker@dickinsonwright.com Michael D. Lipton at mdliptonqc@dickinsonwright.com Dennis J. Whittlesey at dwhittlesey@dickinsonwright.com

www.dickinsonwright.com

October 2012 | 15

I N T E R N AT I O N A L M A S T E R S O F G A M I N G L AW

Congratulates

T H E 2 0 1 2 R E G U L AT O R S OF THE YEAR AMERICAS

I N D I A N C O U N T RY

Kevin O’Toole

Jamie Hummingbird

Executive Director Pennsylvania Gaming Control Board

E VO LV I N G JURISDICTIONS

Kaye McDonald Director of Gaming Financial Services Regulatory Commission of Antigua & Barbuda

Director Cherokee Nation Gaming Commission

EUROPE

Guido Schluetz Senior Government Official Gambling Regulation and Supervision Schleswig-Holstein Germany

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finance

Online Gaming: An Organization's Necessity and Hackers' Paradise

By Louie Velocci and Lesley Luk

Protecting game code and customer data are critical elements to the success of your business and key to the integrity of your offering. To secure gamers’ trust, the industry must deliver two key components: A safe and secure environment, free of manipulation and hackers; and a gaming experience that’s fun, fair, and entertaining.

The online gaming community is a multi-billion dollar industry, housing both proprietar y and conf idential customer information such as emails, home addresses, and credit card information. This is all sensitive data that, if compromised, can put your business in danger or cause you to become offside with regulatory requirements.

Traditional lotteries face demographic changes, increased competition, and technology enhancements, including mobile and tablet technologies which allow gamers to play anytime, anywhere.

Each of these changes brings about additional business and IT control risks which must be addressed.

The hacker threat Whether in ePoker, eCasino, eLottery, or multi-player online role-playing games such as World of Warcraft and Second Life, security breaches are common in the online gaming world. Cheaters are often motivated by vandalism or dominance, looking to achieve a superior position over other players.

Many online games are intended to test your skill and strategy, and authentic

game development companies have a security team assigned to identify the vulnerability of a game, including risk assessment. Many gaming organizations are making the move to the next level by building an internal team dedicated to penetration testing (pentest).

The key to pentest success is in the approach.

Knowing what skills, tools, and how often to test will ensure a clearly defined and successful process is in place.

Pentests are a form of QA that look for flaws in network architecture and design, as well as human behaviour, all in an effort to evaluate the security of a system or network. This is done by simulating an attack from outsiders (people who do not have authorized access) and insiders (people who do), and an active analysis of the game and its vulnerabilities that could result from poor or improper system configuration, including flaws found in its hardware and software.

Many org a n izat ions h ave a leg a l obligation to conduct penetration tests at least once a year, and often by an external party. Pentests conducted by a third party bring extensive knowledge of platforms Taking back control Game development, quality assurance and tests that your team may not know of (QA), and the collection of customer data or be capable of executing.

It’s important to get the perspective of a requires dedicated security resources.

Looking for bugs is a necessary step, variety of external penetration testers. The but not the only one. A company must more gaming gurus you have assigned to QA make sure the moving parts work and means an increased likelihood of uncovering interact together properly from a security the unexpected, and ultimately creating a perspective. Most security weaknesses, safer and more secure gaming environment no matter what the operating system, are for your customers. often found in the game’s architecture.

How can architectural f laws be Louie Velocci is a Partner and Lesley Luk is a overcome from the inside out? Most Senior Manager with KPMG’s Gaming Practice. gamers will not settle for anything less.

Online games are a hacker’s paradise for a variety of reasons, including the fact that individuals remain relatively unknown.

Securing gaming technology tends to be a secondary focus to the actual product release, and hackers often penetrate quickly, making both proactive and reactive damage control processes a must for any gaming organization.

Online games are also unique both in their architecture and resulting security issues, as opposed to traditional lottery offerings. As such, large online games call for significant storage across many servers used to house important accounting information for billing, player statistics, and inventory. The most serious problem occurs when this information lands in the hands of hackers.

With all of these potential security threats, how does the gaming industry ensure gaming code, data, and sensitive information are not compromised?

Canadian Gaming Business | 25

gamingtechnology

The Corporate Security Agenda The state of casino security and surveillance

By Gerald Boose

For this issue of CGB, we reached out to Gerald Boose of The Gaming Security Professionals of Canada for a look at the issues and concerns dominating the casino security and surveillance industry. We also asked some of the country's top providers of gaming security solutions to share their insights on today's security demands and the latest technologies and products that are addressing them.

26  |  Fall 2012

gamingtechnology The Corporate Security mandate in the gaming world varies amongst jur isdictions, but ma na g ing r isk and ensuring regulatory compliance a r e c om m on o bje c t i ve s for a l l .

The functions of game protection, s e c u r it y, s u r vei l l a n c e , a n d investig ation ser v ices then ser ve as some of the major tools used to achieve those objectives. Depending on the jurisdiction and operator, the responsibilities can encompass the security of casinos, eGaming, VLT’s, t radit ion a l lot t er y pro duc t s a nd systems, as well as charitable gaming and horse racing.

The Gaming Security Professionals of Canada (GSPC) is a not-for-profit industry association that was formed in 1994. Its membership consists of executives and senior managers from across Canada who have responsibility for the Corporate Security of their respective organizations or major c o nt r i b ut i n g c o m p o n e nt s . T h e purpose of the GSPC is to identify priority and emerging issues, establish best practices and provide support through education programs and a networking infrastructure.

W hile active throug hout the year, the GSPC uses t wo forums to highlight priorities and develop strategies for the coming year. Both a re held in June, the f irst being GSPC’s A nnual General Meeting (AGM) and Education Program and the second is the Canadian Gaming Summit; Security and Surveillance Education Program. This year they were held in R ich mond, Br it ish Columbia and Niagara Falls, Ontario, respectively. An examination of the combined agenda reveals that which is occupying the minds and time of your security professionals.

One of the major issues that has continued unabated is Anti-Money L a u n d e r i n g ( A M L) i n i t i a t i v e s i n g enera l a nd A M L reg u l at or y compliance, in particular. This issue is considered of such importance that the GSPC formed an Anti-Money Laundering Sub-Committee last year, it was a main agenda item at the AGM, and was the subject of two sessions at the Summit.

A lso top of mind for both the GSPC and the Summit is eGaming, which has been introduced, or is

“The market demand [for eGaming] is obvious, but less evident are some of the challenges of having real-time, online and direct interaction with the customer. ” i n t he adva nced st a g es of bei n g of fere d , b y mo st m ajor g a m i n g jur isdictions across the countr y.

Embraci n g t h is for m of g a m i n g brings with it both opportunities and challenges. Cer t ainly the market demand is obvious, but less evident are some of the challenges of h av i n g rea l-t i me, on l i ne a nd direct interaction with the customer in a ver y dy na mic env ironment.

Conventional physical security and su r veilla nce t ech nolog ies a re of little assistance in this regard and new systems and analy tical tools h a ve h a d t o b e i nt r o du c e d a n d applied diligently to ensure gaming integrity. This challenge will only grow as social media takes on a much more prominent place in the gaming environment.

More specif ic to the GSPC and gaming security is the application of new and emerging technologies. Facial recognition technologies continues to evolve, license plate recognition is prov ing to be highly reliable, fiber optics are enabling centralized surveillance, analytical tools are greatly contributing to the management of risk, and the convergence of technologies is generating a multiplier effect that allows corporate security to provide both better oversight and better service.

These technologies, along w ith eGaming and the adoption of social media, have served to bring increased focus on IT security as a foundation piece in managing the associated risk.

New gaming systems must meet the highest of security standards, and the application of ISO27001 is gaining momentum.

Information Privacy has emerged as one of the highest priorities over the last several years, particularly in light of the ability to accumulate vast amounts of customer information with new gaming and security systems, and the need to ensure that information is collected in accordance with legislative requirements, used only for the intended purpose, and shared only with those having the appropriate authorization.

Pr ivac y I mbedded by Desig n wa s presented on behalf of the GSPC by Dr. Ann Cavoukian, Ontario’s Information and Privac y Commissioner, at the Canadian Gaming Summit.

Completing the picture is Responsible Gaming and, in particular, self-exclusion programs – the latter generally falling within the security mandate. In this regard, the identification of self-excluded persons attempting to participate in gaming is a top priority. To achieve this end, facial and license plate recognition have been very successful in land based casinos.

Systems to ensure self-exclusion data bases are kept current and positive identif ications made to enable early intervention have also evolved for both land based and eGaming.

In conclusion, the introduction of new and emerging technologies and ensuring their responsible application is driving the Corporate Security agenda.

The Gaming Security Professionals of Canada is helping the gaming industry manage that process.

Gerald Boose is Executive Director of Gaming Security Professionals of Canada (GSPC). More information about the GSPC can be found at gspc.ca Canadian Gaming Business | 27

gamingtechnology

To Secure and Protect A look at the newest products in casino security and surveillance Security and surveillance are hot button topics for all casino stakeholders. Now that you've read what trends and concerns are occupying the minds of gaming security experts, here's a look at the latest products and services that are helping them protect the casino floor.

Honeywell The gaming industry is the perfect arena to find the latest advancements in security and surveillance come together, as it is a sector comprised of public facilities and operations that must be protected at all times.

Honey well's M A X PRO V MS (video management system) is one such technology that's leading the pack.

The platform provides staff the ability to quickly identify and react to situations in real time by retrieving and viewing video from any camera on the casino f loor. The system's distributed hardware network design also allows operators to easily select video feeds they wish to view from the surveillance equipment room, as opposed to pulling through all video feeds at once.

In order to be truly effective, today’s casinos must go beyond gaming areas to protect everything from shops, restaurants, and office areas. This is where Honeywell’s integration expertise and broad offering of IP and analog technologies comes into play, with solutions for the gaming industry that include access systems which control employee-only areas; visitor management systems that track corporate visitors; and video technologies, such as 1080p IP cameras that capture crisp, clear close-ups featuring 30 images per second while maintaining a low bandwidth – 28 | Fall 2012

thereby allowing for the continual surveillance of the floor, restaurants, shops, offices, and other vital locations. Adding to this, Honeywell also provides integrated POS (point of sale) video solutions.

Without question, casinos are the perfect proving ground for emerging technologies, so as IP and integrated systems continue to become the norm, it’s fair to assume that security professionals from many different industries will be watching the casino floor to learn about the newest trends.

That in mind, Honeywell is one of the few companies with a wide-enough portfolio to provide these professionals the biggest picture. iView Systems As the success of biometric identification solutions evolve, more and more casinos are adopting this technology into their security and surveillance operation environments to identify, collect, search, and analyze subject data for rapid identification and tracking persons of interest, thereby allowing them to make more informed decisions and aid in reducing losses while protecting casino assets and operations through preventative actions.

T he i D ent i f y re a l- t i me biomet r ic su r vei l l a nce identification platform uses best in class facial recognition matching, significantly helping security and surveillance operations reduce unnecessar y losses by the rapid

gamingtechnology

identif ication of undesirables, such as slot and table game cheats, advantage players, shoplifters, and excluded patrons at any facility requiring subject surveillance and identification. Multiple faces in crowds are individually cropped and analyzed, providing matched results with a confidence score, which are then presented to the user for final action and reporting.

The iGWatch IP iDentify face search solution enables enhanced productivity via faster searches and subject identification, while significantly reducing potential losses from known individuals. iDentify uses integrated quality and lighting measures to ensure maximum accuracy of potential matches, while providing the ability to define confidence control for image matching. These enhancements allow security and surveillance personnel to better manage and identify persons of interest. With full integration into the iTrak Incident Reporting & Risk Management Platform, a complete identification and reporting platform is available, enhancing security and safety across gaming, retail, and corporate security enterprise environments. For more information, visit www.iviewsystems.com/identify.

VingCard Elsafe The hotel check-in process is a lose-lose proposition for the gaming industry. Standing in a long line at the front desk is not an ideal way for a guest to begin their visit to the property; and for the casino, each minute guests spend in

the check-in queue is a minute they aren’t on the gaming floor. Fortunately, a pair of technological innovations from VingCard Elsafe can eliminate the traditional front desk check-in altogether.

Gaming companies now have the ability to offer special loyalt y cards that can double as reusable guestroom keycards. VingCard Elsafe’s patented VISIONLINE access control software allows participating guests to opt to receive a text message prior to arrival that indicates their hotel room number, allowing them to proceed directly to the room upon arrival. VISIONLINE automatically connects with the RF-enabled electronic locks for that designated room, activating the guest’s loyalty card with the proper access credentials. Once the guest’s stay is complete, the system remotely disables the guest’s access privileges.

Another VingCard Elsafe advancement, Mobile Keys, works in a similar fashion. However, instead of using loyalty cards, Mobile Keys turns the guest’s own smartphone into the room key. Mobile Keys works by leveraging an emerging protocol known as Near Field Communication (NFC), which is increasingly being included as a standard smartphone feature.

NFC allows smartphones to exchange encrypted messages with other devices over very short distances, usually about 10cm.

Guests opting to use Mobile Keys receive an encrypted digital access signal on their smartphone prior to check-in, allowing them to skip the traditional check-in process. The access code is programmed to expire at a predetermined time, although it can be remotely shortened or extended if the guest chooses to change the length of stay.

By giving hotel guests the option to skip the front desk checkin process, casinos can position themselves as tech-savvy while reducing the front desk staffing requirements and getting all guests out of the lobby and into revenue-generating spaces more quickly. With technology from VingCard Elsafe, the lose-lose check-in process becomes a win-win.

Avigilon Av ig ilon’s 1 a nd 2 M P Pa n -Ti lt - Z o o m ( P T Z ) cameras offer unsurpassed image qualit y with precise positioning and predic t able h ig h- speed t rack in g. St ren g t hened by the H3 platform with enhanced High-Definition Stream Management, customers benef it from lower bandw idth and stora g e requirement s, which translates to less hardware and cost savings.

Delivering 20 times optical zoom and 12 times digital zoom, the Avigilon PTZ camera allows casino staff to see every detail at 30 frames per second, and easily track targets with 360 degree to combat false liability claims, theft, and unwanted behaviours. The PTZ cameras also feature a custom-designed HD bubble designed specifically for high-definition video.

The indoor and outdoor pendant PTZ cameras are targeted specif ically at expansive areas with manned operations, such as casinos, large retail chains, airports, petrochemical, and city surveillance. They are all backed by an industry-leading three-year limited warranty.

When combined, Avigilon's award-winning Avigilon Control Center (ACC) software with High-Definition Stream Management (HDSM) technology delivers the best evidence, leading to faster response times, reduced investigation times, and superior overall protection. ACC is just as impressive on an Apple or Android mobile device with the ACC Mobile application, and perfect for any security personnel in the field.

Canadian Gaming Business | 29

gamingtechnology

Medeco For security end-users in casino or gaming environments, increased demand for accountability and f lexibility often drives major business decisions, especially as preventing internal threats becomes the main focus. Increasingly, users are turning to electronic locks like Medeco's eCylinders, due to their audit and scheduling capabilities to guard against both external and internal threats, as well as their efficient installation into a variety of applications.

With no wiring or networking needed, eCylinders retrofit easily into existing locks not only on doors, but also on rolling/mobile security carts, storage cages or any padlocked areas or storage.

According to Wes Lutz, eCylinder Product Line Manager, multi-level security within casinos and gaming centres means protection from outside theft or tampering is better than most banks and seldom ever attempted. “Gaming security vulnerabilities have begun to focus inward, and eCylinders provide the tools for reportable accountability to enable loss prevention.”

Medeco Logic and Nexgen XT offer eCylinder benefits for any security requirements. In addition, for facilities with remote programming needs, Medeco's Logic Remote Programming Devices allow for recurring validity of any enabled Logic key within as little as a five-minute window before access expires. Using Cliq Web Manager, programming and management of Logic keys can be done from any location without the added hassle of needing the key administrator to physically possess the key.

Lastly, Nexgen XT offers plug-and-play installation and enables users scheduling, audit logs of entry and electronic rekeying for both equipment and facilities applications. Its route management software provides the ability to easily arrange locks and equipment into groups and assign keys to specific personnel for collection and service. All access activities including authorized accesses, unauthorized attempts, repeat openings, and sk ipped accesses are recorded. User def ined reports make it easy to f ind exceptions and identify problems. For more information, visit www.medeco.com/ecylinder.

30 | Fall 2012

Morse Canada Systems Gaming reg ulations dictate how high risk areas are required to be monitored and secured.

To f u r t h e r e n h a n c e these strict measures, securit y management can add the Morse Key watcher to secure and restrict access to keys that are used to open cash drawers or cabinets used for storing chips, game cards, dice, and other items.

Morse Keywatcher system is ideal for providing this added layer of security for a number of reasons. First, keys placed in a key control cabinet are secured with special, tamper-proof stainless steel key locking rings that provide additional security and functionality. Different colours of the Smart Keys allow the keys to be organized by group, while illuminated key slots make the process of finding and returning keys faster and easier.

What's more, keys stored in a computerized key cabinet and can be accessed only by authorized individuals with an approved user code, an access identification card or a pre-registered biometric fingerprint. Security management can establish permission levels for every user and when the system is connected to the network, management can immediately make any necessary changes.

K now ing who took which key and when is also fundamental to a computerized key control strategy. This audit trail provides critical data of every user who accesses the system and at any time security management can view who has keys out. The systems can even be programmed to send e-mail alerts when keys are not returned on schedule.

Automated key control has taken a signif icant step forward with the introduction of the Keywatcher Touch systems that feature enhanced capacitive touchscreen technology. The larger size of these LCD screens – up to 7” – allows for easier viewing by the user and also permits the addition of more information to be displayed on the screen.

Keywatcher Touch system is designed with capacitive touch screens, which also provide the user with a convenient interface for querying key activity. With just a few touches to the screen, security management can quickly and easily determine who has which key(s) out or when a particular key is scheduled to be returned. For further information on The Keywatcher system, call Oral Ramlochan, Director of Sales and Marketing for Morse Canada Systems Inc. at (905) 792-9820.

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© 2012 Aristocrat Technologies Australia Pty Limited.

gamingtrends

Protecting Boundaries with Geolocation Tech Identifying and addressing areas of risk along the Canada-US Border

By Lindsay Kininmonth

The legal implications of internet gaming along the Canada-US border extend into many common areas of online trade, where similar consequences have occurred.

In one example, the US Justice Department reported that Google Inc. agreed to pay $500 million to settle a criminal probe into advertisements it accepted for online Canadian pharmacies selling drugs across the border in the US. Not surprisingly, this story draws a close parallel to last year’s Black Friday indictments and the vast reach of the Unlawful Internet Gaming Enforcement Act (UIGEA). Therefore, the importance and demand for pinpointing a customer’s location across eCommerce in North America and abroad is increasingly significant for anyone involved in the high stakes game of iGaming.

There’s plenty at stake along the world’s longest undefended border – between Canada and the US – for North America’s emerging iGaming market. Today’s established technologies for identifying and filtering internet gaming traffic are struggling to meet the increasing demands for stringent compliance, while maximizing profitability in the CanadaUS border region.

Drawing borders Currently, IP geolocation technology is commonly used to detect and distinguish the country of origin of internet traffic as either Canadian or American, yet that technology's accuracy is not designed for drawing strict geographical lines on the internet. However, according to US government sources, 90% of Canadians live within 100 miles of the Canada32 | Fall 2012

US border, therefore putting the vast majority of the nation’s residents in a vulnerable ‘buffer zone’. The propensity for Canadians and Americans to live on one side of this border whilst working on the other can also add to the challenge.

Regular account information, such as bank accounts or social security numbers, often trace to one particular side of the border, while online transactions may occur elsewhere. The typical know-yourcustomer (KYC) rules suddenly become much less straightforward when applying them to internet gaming in North America.

Thus far, IP geolocation has only independently been verified as accurate to 10 kilometers; and even then no better than 50% of the time. Therefore, use of these buffer zones has been considered a crucial line of defense against any accusation of illegal cross border gaming.

While some could consider it a cautious compliance method, such large buffer zones alienate a vast player pool and result in significant loss of game revenues. The high dollar figures spent on the acquisition of players are also at a greater risk for zero return if attempting to attract new players from such areas. This in turn causes frustration and customer service issues for

well-meaning players who are unable to gain access, further diminishing the value of an operator’s integrity and profit margins.

Enhancing accuracy Luckily, new technologies and vendor awareness can help address a number of these issues currently faced by the border zones across Canada. Enriching the level of location data collected from each player, using newer methods such as wi-fi and cell-tower triangulation, can significantly increase the accuracy and effectiveness of an operator’s geolocation solution.

The high penetration levels of wi-fi and mobile usage in urban populations allow for pinpointing player locations with incredibly accurate results. Therefore, supplementing an IP-address only solution with this kind of additional data can narrow the accuracy of player’s location within metres, as opposed to miles.

These enhanced solutions can also address other common weaknesses of IP geolocation, such as high incidences of inaccurate results or location “spoofing”.

Current iGaming operators speak of instances where European or Canadian players are identified as American, and thus inadvertently blocked by way of IP filtering on a country level. Iowa also recognizes

gamingtrends the possibility that its own residents could in fact be incorrectly located as out-of-state users, should the state chose to allow some form of internet gaming, according to the white paper released in 2011 by the Iowa Racing and Gaming Commission.

As stated in Malcolm J. Sparrow’s Harvard white paper, Can Internet Gambling Be Effectively Regulated?

Managing the Risks, “in some cases, the user could be on a different continent from the one indicated by their IP address…In fact many gateways to the Internet, such as American Online or proxy servers, by their nature offer geographic separation between the IP address and the end user”. Furthermore, virtually any player with no technical know-how can spoof their IP location by navigating to a proxy site in their internet browser and picking their desired “location” from a drop-down menu. Verifying a player’s location using multiple sets of data can address these vulnerabilities, while additional detection tools that screen for enabled proxies can greatly increase an operator or software supplier’s confidence levels of their players’ locations.

Lottery and Gaming Corporation (OLG) slated to come online this year, Ontario faces the challenge of restricting online play to its residents (physically located) within its provincial borders, where, according to Statistics Canada, 1 in 3 Canadians now call home. A multifaceted and highly accurate geolocation solution will be pivotal in areas such as the Golden Horseshoe where the majority of Ontario’s population resides, due to its extreme proximity to the US that surrounds the region from nearly all directions. As the iGaming landscape continues to expand

across Canada, one can only assume that compliance and customer demands will force the industry to lean more strongly towards advanced geolocation tools, while also keeping pace with America’s race to advance their own parallel efforts.

Lindsay Kininmonth is Operations Manager for GeoComply, a geolocation solution provider to the regulated gaming and broadcast industries.

Prior to GeoComply, Lindsay spent five years in business development at the leading compliance testing company, TST, servicing both the iGaming and land-based markets.

Improving the odds Confidence also plays a significant role in the compliance aspect of location verif ication. Emerg ing iGaming jurisdictions in North America such as Nevada have already stipulated in their technical standards that gaming systems “must employ a mechanism to reasonably detect the physical location of an authorized player attempting to access the interactive gaming system for the purposes of conducting interactive gaming”. Many other gaming regulators in both Europe and North America are now recognizing the inherent weaknesses of IP geolocation.

Regulatory requirements and K YC models are therefore becoming more stringent to ensure operators use multiple geolocation methods to recognize regional boundaries and also abide by federal restrictions. UIGEA in particular calls for “location verification requirements reasonably designed to block access” from non-permitted jurisdictions, and is a top compliance consideration (and risk) for any iGaming stakeholder in North America.

North of the border, Canada is also susceptible to risk across both provincial and national borders. With the Ontario Canadian Gaming Business | 33 Untitled-10 1

12-09-07 6:51 PM

gamingtrends

GeoSweep Profile Atlantic Canada gets on the map to win

By Tammy Mazerolle

Atlantic Lottery successfully launched GeoSweep on June 7, 2012. It is a lottery game unlike any that’s been played before.

GeoSweep is a location-based lottery game built on Google map technolog y. Instead of picking numbers, players purchase Geos – a block of land that can be found by postal code, town, or place name.

“Places are more interesting than numbers,” says Jim Gilbert, Managing Director of Digital Gaming. “We are constantly looking for new products to offer our players and GeoSweep lets players choose their house, their favourite vacation spot, or a place that has special meaning to them, such as their childhood home or honeymoon location.”

Played only on w w w.alc.ca – where Atlantic Lottery has been offering entertaining and safe products to adult

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We create the games that create FaNs Each year the latest releases at our G2E booth are hotly anticipated.

This year is no different. Come see the games, systems, and technologies that will be in the spotlight at booth 2241.

© 2012 IGT. All rights reserved. All trademarks are owned and/or registered by IGT and/or its licensors in the U.S. and/or other countries.

34 | Fall 2012

IGT - 8/23/2012 Canadian Gaming Summit Ad

Canadian Gaming Summit_Ad.indd 1

Atlantic Canadians since 2004 – GeoSweep is a social game, allowing players to tag their Geos with an explanation of why they chose that particular Geo and share it with others. One Geo is $7.50 (25 cents/day/Geo) for 30 days of play. Each occupied Geo gives players a chance to win the $1,000 Daily Guarantee Draw as well as a chance to win the $250,000 GeoSweep Draw. The Daily Guarantee Draw contains occupied (purchased) Geos only, while the $250,000 GeoSweep Draw contains all the Geos on the game map. There is also a $500 prize pool divided equally among occupied Geos in the Prize Zone (approx. 100 squares) surrounding the winning Geo for both draws.

The odds of w inning the GeoSweep Draw are 1: 2,338,528 (the total number of Geos available in the game), while the odds of winning the Daily Guarantee Draw depend on the number of occupied Geos that day.

There are two ways to play GeoSweep: Subscription Play and Pay & Play. With Subscription Play, players keep their Geos as long as they want; automatic renewal payments are made every 30 days unless the player cancels the subscription. Pay & Play offers players a chance to try out the game.

Atlantic Lottery launched GeoSweep with a summer marketing campaign that included traditional and social media as well as a contest for players who opened an www. alc.ca wagering account – or logged in to their existing account – to win a trip to see the Seven Wonders of the World ($39,000 total value).

“What’s exciting for us at is the role that social media is playing in growing a GeoSweep community, adds Jim Gilbert. “Currently, we have 1,700 Facebook followers and a 45% take-up rate of promotional offers by new GeoSweep players.”

Developing, building, and taking to market this new playing experience was a joint effort between Atlantic Lottery and Roboreus, and Atlantic Canadians are the first lottery players to play GeoSweep outside of the U.K. Atlantic Lottery is focused on making GeoSweep a lottery experience unlike any other. Research shows that this game has everything that players want from a lottery game; it’s social, online, and fun to play. The future of lottery is here and it is GeoSweep.

Tammy Mazerolle is Senior Communications Counsel with Atlantic Lottery.

Size: 3.375” x 4.75” Bleed: .125” 8/23/2012 1:29:25 PM

marketing

Sex, Age, Money, and Marketing The case for behavioural economics

By Jim Kabrajee

I’m talking about demographics (what did you think I was talking about?) and whether it’s an obsolete science. I believe the use of demographics is on the way out.

Classif y ing our audiences into g roups or sub categ or ies related t o a g e a nd g ender, i ncom e a nd education ser ved us well for many decades, but demog raphics were developed in a media driven marketing environment, meaning we bought TV programs, radio stations, and print based upon the media our audiences connected w ith. It was eff icient in its day to “buy” females 55+ with a post-secondary education and a household income of $75,000+ because there were T V shows and 36 | Fall 2012

radio stations that claimed to deliver that audience, and publications with readers who f it that prof ile. It was even the foundation of most consumer research.

We blasted messages to them, and formulas that told us that if we could reach 80% of a demographic group, and hit them with a frequency of 3.5 times a week, we would eventually break through and they would go to our casino. For the most part, we were right and it worked. Today is different.

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marketing They don’t consume their media they way they did in the past and there are many different media available to them from a variety of sources.

Older audiences aren’t on Twitter and younger audiences don’t watch T V in liv in g rooms. They don’t respond well to message blasting, preferring to be “engaged” and to “participate” in their interactions with brands or companies. In short, you can’t find your audiences in one place, and they won’t do what you tell them to do anymore.

We ne e d t o st a r t t h i n k i n g differently reg arding the way we a ppr o a ch ou r pl a yer au d ienc e s .

In order to f ind them online and engage them effectively, we need to understand their behaviour. What do they have in common, where do they “hang out” online, what sites do they frequent, what groups do they belong to? WhatSummit do they Ad care about and how Gaming can we connect with them instead Size: 3.375” x 4.75” of blasting messages to them? In my view, the use of demographics should b e suppl a nt e d w it h b eh av iou ra l

economics; the analysis of eff icient and effective ways of inf luencing audience behaviour and choices.

Behavioural economics is about understanding and predicting a u d i e n c e b e h a v i o u r w h i ch i s a change from demographic analysis which relied on collecting historical data about groups. In the past we used quantitative research to tell us how audiences behaved. Today we need to apply new science to tell us how audiences are going to behave.

I t ’s s t i l l e a r l y d a y s , b u t t h e s c i e n c e I ’m t a l k i n g a b o u t i s human anthropolog y – the study of human behaviour and culture.

A nt h r o p o l o g y, w h e n u s e d i n a m a rk et i n g appl ic at ion , helps u s understand what motivates humans to respond in certain ways, why we react to some offers and not others, what inf luences our decisions and what groups affect our behaviour? At the core of anthropology is culture and according to those who study human anthropolog y, as much as half of all behaviour is determined

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by culture or the groups to which we belong. Groups can be real or virtual; it doesn’t matter. If we subscribe to certain blog posts, we are members of that group. If we frequent certain websites or mobile applications, we are members of a group. Loyalty to virtual groups is just as strong as real ones like sports clubs or social groups. The real value to us as marketers is that we can track these groups and their opinions, participate w ithin them, and make offers or engage with the members to inf luence behaviour.

So, sex, age and money or behavioural economics, which w ill dominate marketing in the future?

Think about future behaviour versus past behaviour and you’ll have your answer.

Jim Kabrajee is the CEO of Marshall Fenn Communications, a full service marketing agency with extensive experience in casino marketing throughout Nor th America.

Jim can be reached at 416.962.3366 or jimk@marshall-fenn.com

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legal

An Unprecedented Online Settlement

By Javad Heydary

In a stunning and unusual agreement, the operators of the world’s largest online poker site, PokerStars, managed to strike a settlement with the United States Department of Justice to permanently dismiss the civil actions brought against PokerStars and Full Tilt Poker. Though this is an interesting development in and of itself, what is unprecedented is the manner in which such a result was achieved. A required condition of PokerStars and Full Tilt Poker’s release from civil action was the actual acquisition of Full Tilt Poker by PokerStars, further expanding what is already the largest online poker site in the world.

In addition, the deal also requires PokerStars to pay US$731 million, including US$547 million forfeiture to the United States government, and a US$184 million payment back to players who had deposited their money into the websites’ accounts.

Compared to PokerStars revenues, this is only a modest amount.

As part of the settlement arrangement, users of PokerStars and Full Tilt Poker who had their money seized by the Department of Justice can f ile for the return of the money they had banked w ith Pok erSt a r s a nd Fu l l Ti lt Pok er.

T h ou g h it i s n o t ent i r el y cle a r at t h is point , it is ex pec ted t h at users w ill be fully compensat ed for the amounts in their respective accounts, including their arguably unlawfully-obtained winnings.

T h o u g h Po k e r S t a r s d o e s n o t admit any w rongdoing as par t of 40 | Fall 2012

the settlement, the criminal charges against individuals involved in the m at t er, i nclud i n g t he Ca n a d i a n founder of PokerStars, Isai Scheinberg, remain to be prosecuted.

However, the settlement did require that Scheinberg step down as CEO of PokerStars. Three of the eleven named individuals have already pled guilty to the criminal charges.

After paying out the Department of Justice, PokerStars will grow even larger, and will continue to operate its real-money gaming site outside of t he Un it e d St at e s , i nclud i n g Canada. PokerStars has assured the former Full Tilt Poker user base that Full Tilt Poker will be re-launched within the coming months.

It is uncertain whether this civil settlement represents a rela xation from the US government’s hard-line approach that it has taken against online gaming companies over the

last 18 months. What is clear, however, is that gaming entities both private and public, such as the Ontario Lottery and Gaming Corporation, are ratcheting up their real-money online gaming activities outside of the United States.

As the United States slips further into the minorit y of online-gaming proh ibited jur isdic t ions, a nd a s more and more g aming operations enter the international realm of the internet, more of such scenarios will undoubtedly unfold in the coming years. What is doubtful, is whether any such scenario will include reaching a deal allowing the indicted company to actually grow as a condition of its release.

Javad Heydary is Managing Director of He ydar y Hamilton PC . He regularly advises clients on online gaming issues and complex regulatory and litigation matters.

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Casino du Lac-Leamy's

$50 million renovation

Casino du Lac-Leamy's renovation team Project Manager: Casiloc (subsidiary of Loto-Quebec) Contractor : Construction Verreault inc.

Architects : Pelland Leblanc architectes and Fortin Corriveau Salvail Architecture + Design Mechanical and electrical engineering: Bouthillette Parizeau - Pageau Morel Structural and civil engineering: Nicolet, Chartrand, Knoll ltée

By Matthew Bradford This summer, the Casino du LacLeamy unveiled plans to commence a $50 million renovation in fall 2012.

The projec t w ill see subst a nt ia l enhancements and upgrades made to the popular Quebec gaming facility, which attracts more than 3 million visitors annually.

The renovations are designed to fulfill three key objectives: improve the f low of Casino du Lac-Leamy's environment and create a gaming area that favours social interactions; update the decor, equipment, and overall ambiance; and contribute to improving the overall customer experience. “ We completed our la st major construction project in 2001, when we added the hotel, conference centre and theatre. After more than 15 years of operation, it’s time to invest in our gaming area,” said Kevin Taylor, General Manager of the Casino du Lac-L eamy and Casino de MontTremblant, in an announcement to 42 | Fall 2012

press. “This will allow the Casino du Lac-Leamy to retain a competitive advantage in an environment that is evolving rapidly.”

Highlights of the facilit y-w ide renovations include the construction of a cent ra l ca si no f lo or “ hub ”, sporting a bar, lounge, and nightclub.

Adding to this, the renovation will involve the installation of a stateof-the-art multimedia environment, designed to energize and enhance C a si no du L a c- L e a m y 's o ver a l l atmosphere.

“The multimedia env ironment was successfully launched at our sister casino in Charlevoix, albeit on a much smaller scale,” says Catherine Schellenberg, spokesperson for the Casino du Lac-L eamy. “Through use of light and projection, you can convey a sense that something is going on, whether it’s a customer who has won a jackpot, or a special promotion or event that's going on.”

A nticipation is high for Casino

du Lac-Leamy's upgrades. They will be conducted over four phases and are slated for completion by January 2015. According to Schellenberg, the renovations come at a time when stiff competition is a fact of life for the gaming industry. “The reality of the casino business is that competition is fierce. There are almost 20 casinos within a day’s drive of ours and almost half of these are casinohotels, similar to ours. Add online gaming into the mix and you see that competition is evolving very rapidly and we have to stay on top of our game, so to speak.

Our vision is to be the best in customer ser vice, while offering a variet y of innovative games. Competition has always been and will continue to be around. It’s a great motivator to keep re-thinking the way you do business and constantly do better.”

For more information, and for updates, visit www.casinosduquebec.com/lacleamy, follow it on Twitter @CasinoLacLeamy, or through its Casino du Lac-Leamy Facebook page.

June 17-19, 2013

Palais des congrès de Montréal Montréal, Québec

“Where the Canadian Gaming Industry Meets”

PL AN TO AT TEN C ANADA’S PREM D ANNUAL INDUS IER T CONFERENCE ANRY D EXHIBITION!

In 2013, the Summit says “Bonjour” to Montréal, Québec

If your company is interested in exhibit or sponsorship opportunities at the Canadian Gaming Summit, please contact Richard Swayze at 866-216-0860 ext. 246 or richards@mediaedge.ca

www.CanadianGamingSummit.com

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2012 SUMMIT HIGHLIGHTS This past June, gaming delegates from across Canada and the US converged on Niagara Falls, Ontario, for the 16th Annual Canadian Gaming Summit. The 3-day event united professionals from all corners of the industry for the purpose of sharing ideas and insights, showcasing new products and services, forming new partnerships, growing their business and celebrating the growth of gaming in North America and beyond.

The Summit was headquartered in the state-of-the-art ScotiaBank Convention Centre, with additional events located in a variety of local hot spots. In addition 44 | Fall 2012

to a comprehensive session program, attendees were granted access to the exhibition floor of the Summit's impressive annual Trade Show, while enjoying catered breakfasts and lunches, as well as keynote presentations and plenaries featuring industry leaders such as Rod Phillips, President and CEO of OLG; and James J. Murren, Chairman and CEO of MGM Resorts International.

Outside of Summit hours, delegates were also treated to a full complement of networking events and entertainment.

Highlights included the Canadian Gaming Summit Golf Classic, at the renowned

Whirlpool Golf Course; the Opening Reception at the Elements on the Falls Restaurant with its stunning views of the Falls, with guests offered the chance for a unique “Journey Behind the Falls”; an After Party of rock & roll favourites at Jimmy Buffett's Margaritaville; a VIP Reception at the chic R5 Lounge in the popular Fallsview Casino Resort; and the elegant Awards Reception and Charity Gala in Fallsview, followed by the Chair’s Reception upstairs in the stylish 21 Club. This year's Summit featured record numbers and was one of the most successful to date.

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1. Participants in the annual Summit “Golf Classic” at the Whirlpool Golf Course. 2. A Golf Classic player has 12.

his ‘moment of truth’ on the tee! 3. It was all smiles at the Summit’s Opening Reception. 4. Opening Reception attendees enjoyed a bit of light jazz at the brink of the Falls. 5. Summit Exhibition Floor. 6. Delegates checking out the latest machines on the floor. 7. Larry Flynn, the OLG’s Senior Vice President of Gaming, leads an educational session. 8. Keynote Speaker Rod Phillips, President & CEO of OLG, speaks at the Summit’s Opening Breakfast. 9. The Industry Roundtable on Governance & Ethics was led by panelists from Great

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Canadian Gaming Corp, Falls Management Co., KPMG, and OLG represented by Paul Godfrey, Chair. 10. The Summit Delegate Luncheon featured Keynote Speaker James Murren, Chairman and CEO, MGM Resorts International. 11. Summit exhibitor Terry Clark of Accro Furniture Industries and his wife enjoy the Awards Gala reception. 12. Delegates “flocked” to the Awards Gala held at the Fallsview! 13. 2012 Gala Charity donation cheque is presented to the United Way of Niagara Falls and Greater Fort Erie. 14. Industry Leadership and

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Outstanding Contribution Award winner: Harry Oshanski, Casino Rama President and CEO. 15. The ‘Stars of Beatlemania’ rocked the Awards Gala stage, paying tribute to the Fab Four. 16. Industry Leadership and Outstanding Contribution Award winner: Larry Flynn, Senior Vice President, Gaming, OLG. 17. Darryl Schiewe, Vice-President of Casino System Implementation, BCLC, receives his Award for Industry Leadership and Outstanding Contribution. 18. Gary Parker (centre) from the Snipe Clan of the Tonawanda Seneca Territory leads the First Nations Welcome to begin the Awards Gala. 19. Winner of the First Nations Award for Leadership, Patrick Armstrong of the Ojibwe-Dokis First Nation, Executive Sous Chef, Casino Rama. 20. Gary Edgar, Chair of the Mississaugas of Scugog Island First Nation, winner of the First Nations Award for Lifetime Achievement. 21. Derek Suzack of the Batchewana First Nation, Manager of Health and Safety, Casino Rama, receives his First Nations Employee of the Year Award. 22. Angeline Joe of the Champagne and Aishihik First Nation, Accountant, Grey Eagle Casino, receives her First Nations Award for Community Service.

We look forward to welcoming you to ‘La Belle Province’ for the 17th Annual Canadian Gaming Summit on June 17-19, 2013, at the Palais des congrès de Montréal in Québec. See you there!

For more details visit www.CanadianGamingSummit.com

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